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KVP fund on backburner

Baburajan K

The much-talked about $250 million KVP venture fund, set up by Consolidated Press Holdings chairman Kerry Packer, Himachal Futuristic Communications chairman Vinay Maloo and the now scam-stained broker Ketan Parekh, has been put on the backburner.

"We have decided to put the venture on hold owing to the recent meltdown in infotech scrips and downturn in infotech segment," said Goushal C K, chief financial officer of HFCL.

The fund's job was to mainly identify, incubate and finance ideas in high growth, high-technology areas such as infotech, software, Internet, e-commerce, telecom, media and entertainment, and biotechnology.

The country's largest venture fund, set up in March, 2000, will not take off until a major recovery happens in infotech worldwide. "We will review our operations in India if there is a recovery in the infotech sector," he said.

Industry sources, however, point out some more reasons for the development. They feel that Ketan Parekh, who is under the scrutiny of several central investigative agencies for price rigging, among other things, will not be in a position to inject huge funds in the present circumstance. All three partners were to take equal stakes, while Parekh and Maloo were planning to hold the equity in their individual capacities.

Vinay Maloo, chairman of HFCL, said: "Any decision on the fund will have to be taken in consultation with other partners. Though we have been going slow due to some reasons, we are yet to take any decision on the future of the fund."

Lack of regulations to convert the venture fund into a company and go for an initial public offering has also forced KVP Ventures to put off its investment plans. As per the present guidelines, venture funds are not allowed to raise funds via public issues.

"Though the fund had initiated talks with government authorities to get approval for a company status, the Centre did not make any regulation to this effect," sources close to Parekh said.

After launching the fund in 2000, it never invested in any company though talks were on with a couple of leading portals and infotech firms. The promoters were also looking for a strategic partner to chip in the funds.

Consolidated Press Holdings, one of the promoters of KVP Ventures, had picked up a 10 per cent stake in HFCL for about Rs 10.49 billion. It had also entered into a joint venture with HFCL for floating two companies - one for developing software and the for its e-commerce foray.

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