SRI Fund - Frequently Asked Questions (FAQs)

1. What is SRI Fund?

SRI Fund is a Fund of Funds (FoF) launched by NSIC Venture Capital Fund Limited (NVCFL) to provide growth capital support to MSMEs through SEBI-registered Category I and Category II Alternative Investment Funds (Daughter Funds).

2. Who is the anchor investor in SRI Fund?

The Government of India through the Ministry of Micro, Small and Medium Enterprises (MoMSME) is the anchor investor.

3. Who are the sponsors for SRI Fund and what is the overall Fund corpus?

SRI Fund is sponsored by NSIC Ltd. through its wholly owned subsidiary NVCFL. The overall Fund corpus is Rs. 10,006 crore.

4. Who is the Investment Manager and Legal Advisor for SRI Fund?

Investment Manager: SBICAP Ventures Limited.
Legal Advisor: Khaitan & Co.

5. What is the tenure of SRI Fund?

The tenure of the Fund is 15 years and may be extended as per AIF guidelines and approvals.

6. What is the investment period of SRI Fund?

The investment period of SRI Fund is 13 years.

7. What is the investment objective of SRI Fund?

To provide growth capital support to MSMEs through Daughter Funds by way of equity, quasi-equity and debt investments, support employment generation, foster growth and promote self-reliance.

8. Can SRI Fund invest directly in MSMEs?

No. SRI Fund invests only in Daughter Funds, which then invest in MSMEs.

9. What is the definition of a Daughter Fund?

A Daughter Fund is a SEBI registered Category I or Category II Alternative Investment Fund (AIF) that invests in MSMEs.

10. Are AIFs funded under other Government Fund-of-Funds schemes eligible?

Yes, subject to compliance with applicable conditions of the SRI Fund.

11. What is the permissible commitment from SRI Fund?

Minimum commitment is Rs. 25 crore and thereafter in multiples of Rs. 5 crore. Maximum commitment is the lower of 20% of target corpus or Rs. 2,000 crore.

12. What is the validity period of SRI Fund commitment?

The commitment remains valid for 18 months, during which the Daughter Fund must achieve first close.

13. Is there any minimum capital that Daughter Funds have to raise?

Daughter Funds must raise 80% of the corpus from outside investors. For a minimum SRI commitment of Rs. 25 crore, a corpus of at least Rs. 125 crore is required.

14. What is the minimum investment requirement in MSMEs?

Daughter Funds must invest at least 5 times the amount received from SRI Fund (net of fees and expenses) into MSMEs with Udyam Registration.

15. What is the permissible tenure of Daughter Funds?

Daughter Funds may have a tenure co-terminus with the remaining tenure of the SRI Fund, subject to AIF regulations.

16. What is the permissible investment period of Daughter Funds?

Maximum 6 years from the date of final close of the Daughter Fund.

17. What is the target return for Daughter Funds?

Higher of 12% gross IRR per annum or the highest rate offered to any other contributor in the Daughter Fund.

18. What is the hurdle rate for Daughter Funds?

Higher of 8% per annum or the highest rate offered to any other contributor, calculated on a compounded annual basis.

19. What is the management fee for Daughter Funds?

Lower of 2% per annum or the lowest rate offered to any other contributor.

20. Which is the target group for SRI Fund?

MSMEs with growth potential requiring growth capital support and capable of creating employment and economic impact.

21. Which MSME definition will be used?

MSMEs as defined under the MSMED Act, as amended from time to time, and possessing Udyam Registration.

22. Is there any preferred sectoral or geographical focus?

Investments may be made across sectors such as manufacturing, services, agriculture, pharma, auto and chemicals throughout India.

23. Are any sectors prohibited?

Yes. Gambling, obscene content, illegal activities, NBFCs, non-profit organizations, micro-credit, financial inclusion sector, SHGs and financial intermediaries are excluded.

24. What are other conditions applicable to Daughter Funds?

Compliance with SEBI regulations, KYC norms, ESG framework, impact assessment, statutory requirements, anti-money laundering and anti-corruption regulations, and disclosure of conflicts of interest.

25. Is a placement agent required?

No. Applications must be made directly to SRI Fund. No placement fees are payable.

26. What diligences will Daughter Funds undergo?

Legal, financial, tax, integrity and other due diligences conducted by appointed advisors. Costs are borne by the Daughter Fund.

27. What are the steps involved in the investment process?

Preliminary Screening → Detailed Evaluation → Due Diligence → Commercial Negotiation → Documentation → Investment Committee Approval → Investment, Monitoring and Divestment.

28. What is the technology platform for managing investments?

A technology platform is being developed to manage investment-related activities online.

29. How can a prospective Daughter Fund apply?

By emailing srifund@sbicapventures.com and srifund@nvcfl.co.in. Future applications will be accepted through the online platform once operational.

30. Can a rejected Daughter Fund reapply?

Yes. Reapplication is allowed after six months from the date of rejection.

31. What are the reporting requirements for Daughter Funds?

Annual and quarterly reports, investment information, valuation reports, tax returns, compliance statements, impact assessment reports and regulatory compliance reporting.