Ubharte Sitaare Alternative Investment Fund
Part of: GS Prelims and GS- III – Mobilization of resources
In news Recently, the Ministry of Finance has launched ‘Ubharte Sitaare’ Alternative Investment Fund to facilitate debt and equity funding to export-oriented MSMEs (Micro Small and medium Enterprises).
About the scheme
- Under the scheme, an identified company is supported even if it is currently underperforming or may be unable to tap its latent potential to grow.
- The scheme diagnoses such challenges and provides support through a mix of structured support covering equity, debt and technical assistance.
- It will also have a Greenshoe Option of Rs 250 crore.
- A greenshoe option is an over-allotment option, which is a term that is commonly used to describe a special arrangement in a share offering for example an IPO
- The fund has been set up jointly by Exim Bank and SIDBI (Small Industries Development Bank of India) which will invest in the fund by way of equity and equity-like products in export-oriented units, in both manufacturing and services sectors.
What are the Criteria for Selecting Companies?
- Companies will be selected for support based on their unique value proposition in technology, products or processes that match global requirements.
- Fundamentally strong companies with acceptable financials with an annual turnover of up to approx. Rs 500 crore.
- Companies with a good business model, strong management capabilities, and focus on product quality.
What are the Objectives?
- To enhance India’s competitiveness in select sectors through finance and extensive handholding support.
- Identify and nurture companies having differentiated technology, products or processes, and enhance their export business;
- Assist units with export potential, which are unable to scale up their operations for want of finance.
- Identify and mitigate challenges faced by successful companies which hinder their exports.
- Assist existing exporters in widening their basket of products and target new markets through a strategic and structured export market development initiative.
What is an Alternative Investment Fund?
- Anything alternative to traditional forms of investments gets categorized as alternative investments.
- In India, AIFs are defined under Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
- It refers to any privately pooled investment fund, (whether from Indian or foreign sources) which are not presently covered by any governing fund management of SEBI nor coming under the direct regulation of any other sectoral regulators in India.
- It includes venture Capital Fund, hedge funds, private equity funds, commodity funds, infrastructure funds, etc.
News source: TH