Ubharte Sitaare Alternative Investment Fund

WHY IN THE 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:

• 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 (Initial Public Offering) that will enable the investment bank to support the share price after the offering without putting their own capital at risk.
• 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.

Criteria for Selecting Companies:

Unique value:

• Companies will be selected for support based on their unique value proposition in technology, products or processes that match global requirements;

Financial Strength:

• Fundamentally strong companies with acceptable financials, and outward orientation; small and mid-sized companies with ability to penetrate global markets, with an annual turnover of up to approx. Rs 500 crore.

Business Model:

• Companies with a good business model, strong management capabilities, and focus on product quality.

Support:

• Eligible companies can be supported by both financial and advisory services by way of equity/equity-like instruments, term loans for modernisation, technology or capacity upgradation; and technical assistance for product adaptation, market development activities and viability studies.

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.