PE fund for defence mulls investment in city bomb unit

Nagpur: IDBI Capital and Securities which has invested Rs30 crore into a state government’s fund created to invest in start-ups and innovations in defence and aerospace sectors is in advanced stage of talks with around nine companies, including one in Nagpur, for pumping in private equity into the ventures.
This is the country’s first ever dedicated fund for the defence and aerospace sector. There are plans to take the entire corpus to Rs1000 crore. The total investment in all the businesses clubbed for which talks are under way comes to around Rs130 crore, said IDBI Capital’s vice-president Amey Belokar
A final decision is expected to be taken soon and an announcement may be made by the month’s end. IDBI Capital is a fully owned subsidiary of IDBI Bank. After the state government created a Rs300 crore fund for investing in such ventures, IDBI Capital too contributed Rs30 crore in it. The fund will cover investment into businesses related to army, navy and air force also space technology. IDBI will also be raising another Rs700-odd crore taking the corpus to Rs1000 crore. The funds will be raised through other financial institutions, banks and insurance companies. The process to raise additional funds is expected to start within a year, said Belokar.
The companies in which the fund private equity investment are proposed to be made are start-ups as well as existing business.
Sources said company in Nagpur was a start-up and will be engaged in making smart ammunition for aerial bombs. There are plans to invest close to Rs30 crore in Nagpur unit, subject to the final due diligence to be done, said the source.
One of the conditions for providing private equity is that investment will have to be done in the state itself. Apart form Nagpur, the units are in Mumbai and other parts of the state. One of the companies located in Mumbai is engaged in making night vision optics for Dhanush, the indigenous artillery gun made on the lines of Swedish Bofors. The device will provide visibility till 2 kms in the dark, said the source.
The guns which have been developed by the Ordnance Ffactory Board (OFB), are being made at the Gun Carriage Factory at Jabalpur. Recently the first batch of six guns was handed over to the army. Another company with which IDBI Capital is holding negotiations is engaged in satellite technology, said the source.