SBI’s PE arm hikes climate fund’s target 5 times to Rs 2,000 crore

SBICap Ventures has already got commitment from European Investment Bank (EIB) for about Rs 215 crore.

State Bank of India’s private equity capital arm has scaled up the target for its Climate fund by five times to Rs 2,000 crore on growing emphasis on investments in clean technology and environment-friendly businesses.

This climate and environment-focused fund started off with a corpus of Rs 400 crore. When it approached the market for commitment, it got good traction from global investors. This led to scaling up of its corpus target, SBI group executives said.

SBICap Ventures, an SBI group company that is managing the fund, has already got commitment from European Investment Bank (EIB) for about Rs 215 crore. It is also talking to financial institutions from Japan and the United Kingdom for commitments. Investment by a Japanese agency is likely to be over Rs 200 crore. Neev Fund II will invest in Indian small and medium-sized enterprises (SMEs). It will provide growth and expansion capital to companies offering solutions for clean energy, electric vehicles, efficient use of raw materials and water as well as circular economy projects.

It will enable India’s innovative and emerging companies to fund their growth through equity or quasi-equity instruments.

Besides overseas investors, a clutch of domestic financial institutions are also going to invest in the Neev II fund. Small Industries Development Bank of India (SIDBI) has indicated that it will commit Rs 160 crore. The total commitments are expected to touch Rs 1,000 crore by the end of this month. SBI has given a fairly sizable commitment that is about Rs 400 crore (20 per cent of the fund corpus).

SBICap Ventures expects to have the full fund up and running by June 2022. Work has also commenced on making the investment. It has made commitments of Rs 275 crore into three companies, including two in waste management and another in pollution control technology.

Besides the climate fund, SBI group’s entity is also managing Neev Fund I — a Rs 500-crore one started in 2015. It is a partnership between two governments – the United Kingdom and India. The SBI group was given the mandate to manage the fund.