intro to sidbi - franchise india · pdf filesidbi risk capital operations fund of fund...

INTRO TO SIDBIWe empower MSMEs

July 26, 2013

2

SIDBI : Background & thrust areas

Risk Capital : Products

Service sector

SIDBI : Background

• Apex Financial Institution for MSMEs

• Impact initiatives

o CGTMSE

• collateral free loans upto Rs.1 crore (> 1million guarantees)

• Operates through all banks

o Promotion of venture capital industry

• Corpus support to VCFs/ AIFs

• MSME Risk Capital fund/ India Opportunities Venture Fund

o MSME Exclusive SME rating agency

o Resource support to NBFCs/ SFCs/ Banks

o Micro Finance

• Direct Finance Practice

o Traditional products

o Risk capital products

o Sustainable finance

SIDBI :Thrust Areas

Risk Capital

Service Sector

focused products

Receivable Finance

Sustainable Finance

5

SIDBI : Background & thrust areas

Risk Capital : Products

Service sector

SIDBI Risk Capital Operations

Fund of Fund Operations

Equity investment through SVCL

Direct Risk Capital

•Corpus support to VC/PE funds

•52 funds supported•11 regional and 41 national funds

•SIDBI Venture Capital Ltd : SIDBI’s venture capital arm

•Managing 4 funds•AUM : Rs 1500 crore

•Dispensed through SIDBI branches

•Direct disbursements to MSMEs

•Simpler RC products

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Non-Participative debt based products

Subordinated Debt

Fixed coupon

7 yr repayment

3 yr moratorium

Equity based

Optionally Convertible

Cumulative Preference Shares

Equity

Participative debt products Sub debt/debt/ debentures with

Conversion options Royalty features Equity kickers

Risk Capital Products

Risk Capital : eligible entities

Early Stage

• Early stage service enterprises

• Structured debt product

• Customer acceptance established

• Need not be profit making

• Maximum assistance : Rs.1 crore

• Optionally Convertible Debt

• Equity Kicker/ conversion rights

• Tenure : Upto 7 years

• Under CGTMSE cover

• Milestone based disbursement

Growth Stage

• Manufacturing and service sector

• Growing, profitable units with goodbanking track record

• Any requirement incl. intangibles

• Based on cash flows

• Participative and non participativedebt structures

• Tenure : Upto 7 years withmoratorium upto 3 years

• IRR expectation : around 16%

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SIDBI : Background & thrust areas

Risk Capital : Products

Service sector

Service Sector

Asset backed

Cashflowbased

Service Sector

• Projects benefitting MSMEs

• With more than 60% MSME presence

Asset heavy projects

• Loan against property

• Corporate loanLAPS

• IT, Software, BPO, Logistics etc.

• Other ServicesCash flow based

Franchisee / Dealer

Commercial Real Estate

• Hotels

• Hospitals

• Franchisee financing

• Dealer financing

Service Sector : Cash flow based

• Eligibility

o Existing entities with established profitable model (net profits in atleast 2 of last 3

years)

o New entities promoted by entities/promoter group with such track record in

similar/ related line of business

o VC/PE assisted companies

• Quantum

• Need based

• Eligible areas of finance

o Capex,

o movable assets,

o current assets,

o intangibles (marketing, brand building, etc.),

o WC/ WC margin.

Service Sector : Cash flow based

• Interest

o Internal rating based

• Repayment

o Upto 7 years with moratorium of upto 12 months based on cash flows

• Promoter contribution

o 25%

• DER

• 2.5:1

Service Sector : Cash flow based

Assets financed

•1st charge to lender•Senior lender status•But no comfort on realizable value

Identified cash flow

• Escrowed cash flow stream which is reliable•Should be able to cover repayment with some margin

Other Collaterals

• Any other available collateral• hard asset• liquid security• to cover part of the assistance

+ +

Assistance on the basis of

Sustainable Finance

Pioneered Green Rating

Promotes environmental and social standards inMSMEs

Funding for :

• environment friendly technologies

• Energy efficient equipments

Direct Finance – Term products

SecuredDebt

Subordinated Debt / OCSD

Convertible Debt

Convertible Debentures

OCCPS / Equity

Direct Finance – Short term products

Working Capital

Bill discounting

Guarantees / Letter of

Credit

Thank You

equity@sidbi.in