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UTI Venture Funds, part of India's largest mutual fund, plans to nearly double investments in 2003 to around $20-$25 million, with a special focus on the fast growing back-office services and life sciences sectors.
"Our immediate focus is to make big ticket-sized investments in companies seeking late-stage funding," Raja Kumar, chief executive officer at UTI Venture Funds Management Company Ltd, told Reuters in an interview on Tuesday.
"Our plan is to make at least four to five significant investments in about a year, mostly in the IT-enabled services and life science industries."
This renewed interest in investment comes after a long lull.
The venture firm, a fully-owned subsidiary of the state-run Unit Trust of India, launched a $60 million fund two years ago to invest mainly in software, telecom and biotech firms.
But it has invested only about $12 million in a few companies so far as venture firms turned cautious after the dot-com collapse
It owns stakes in MosChip Semiconductor, a chipmaker, Strand Genomics, a start-up that makes software for use in the biotech and pharmaceutical industry and a few small technology firms.
Leading venture capital firms in India raised money during the hey days of the Internet and are now sitting on piles of cash after investing in only a handful of companies.
"The climbdown to realistic expectations of valuations by start-up firms, the success of many Indian companies in the technology outsourcing space and signs of improvement in the public market will lead to more venture investments," Kumar said.
India's software sector, which makes low costs its competitive advantage, hopes to sustain growth with the help of call centres and remote processing services.
An increasing number of global firms are rapidly moving back-office work to India to cut costs in a stubborn slowdown by taking advantage of the nation's low-cost army of software engineers and other English-speaking graduates.