General Insurance Company of India (GIC), the ‘Indian Re-insurer’ has committed to invest Rs. 5 crore in APIDC Venture Capital (APIDC VCL) Biotechnology Venture Fund. APIDC-VCL, is a public-private partnership between the Ventureast Group and the Andhra Pradesh Industrial Development Corporation (APIDC).

The Biotechnology Fund has reached a corpus of Rs. 40 crore with this commitment by GIC. The other commitments include Rs. 15 crore from the Government of Andhra Pradesh, Rs. 10 crore from Andhra Bank, and Rs. 10 crore from Life Insurance Corporation of India (LIC). The Fund is in discussions with a number of financial institutions, banks, and insurance companies etc for investment to reach the targeted Rs. 150 crore.

The Biotechnology Fund with a size of Rs. 150 crore is India’s first national fund focused on biotechnology companies. It recently received approval from Insurance Regulatory and Development Authority (IRDA) for investment by insurance companies making it the first technology fund to receive such an approval.

Having taken care of general insurance/reinsurance needs of the country for the past 30 years, GIC is now exclusively dealing with reinsurance both, inward and outward. It has emerged as one of the largest reinsurer in the Afro-Asian region. On the basis of strong financials (net worth of about Rs. 3,000/- crore and total assets of about Rs. 10,000/- crore), GIC has been rated ‘A’ (Excellent) by the internationally renowned rating agency ‘A.M. Best’.

The Fund is raising capital commitments of Rs. 150 crore from institutional investors. The fund has already started operations with the corpus it has to-date. It is a ten-year close-ended fund.

The Fund will operate primarily as a start-up and early-stage investor in businesses focusing on life sciences-related areas such as health care, drug discovery, agriculture, dairy, environmental and industrial applications.

The Fund’s objective is to achieve attractive returns primarily through the generation of capital appreciation by investing in equity, equity-related and mezzanine capital instruments of unlisted companies as per SEBI guidelines for venture capital venture capital investment in India.

The Fund would normally invest up to 15%, but no more than 25% under any circumstance, of the committed capital of the Fund in an investee company. The investment exposure per investee company would be between 2% and 49% of its total share capital. The Fund would make investments in about 20 to 25 deals during the initial three-to-four year period of the Fund life) and begin disinvestments thereafter.

The Fund anticipates exits from its investments through a variety of avenues: strategic sale to the corporate co-investors or other corporations; sale to other financial investors (including investors in the Fund or a separate fund focused on acquiring such investments); mergers and acquisitions, public offering or buyback with co-investors or partners; and a sale of assets of the investee company such as its intellectual property. The Fund may also seek to list itself or transfer its holding in an investee company directly.