NEDFi Equity Fund Scheme

The North Eastern Development Finance Corporation Limited (NEDFi) has initiated the Equity Fund Scheme to contribute to the development of entrepreneurship in the North Eastern Region (NER). The primary objective of the fund is to invest in projects promoted by the entrepreneurs in NER having sound business ideas with potential for high growth and more than normal returns on equity-related investments. Let us look in detail about the NEDFi Equity Fund Scheme in this article. To know about the NEDFi Rupee Term Loan Scheme

Eligibility Criteria

The below listed are the board investment criteria for the project selection that would be a combination of the following factors : Strong and Committed Core Group: The applicant businesses to be managed by an individual or team with the demonstrated performance track record of performance, commitment and energy. Growth potential business plan: The applicant businesses must have the increasing productive potential for the sustainable high growth for a company and must ensure an increase in economic growth. Long-term Competitive Advantage: The business must have business operation performance along with innovation and a sustainable competitive advantage. Viable Business Plan: The applicant must have a viable business model which offers above the average level profitability and market its products and services that leads to the attractive return on the project investment.

Mode of Investment

Equity Capital or Partly/ Fully Convertible Debentures: In case of project investment in the form of convertible debentures, the rate of interest would be stipulated only at the time of sanction. To know about the Equity Investment Documents - Click here

Areas for Investment

List if indicative areas or sectors of investment avenues are as follows:

The units that are operated based on the natural resources and agriculture of the North Eastern Region.
The business units that are set up establishments in the region in the field of IT, Biotechnology or uses other frontier technology services which have strategic management importance in the NE region.
The commercialization of indigenously developed technologies including the innovation in technology that leads to the service quality up-gradation and also cost reduction.
Green Business Development/ eco-friendly business and ventures for the protection of the environment and community.
Agri-horticulture/ Agriculture Marketing Process
Other Food processing units
Green Energy (especially generation of conventional electricity generation)
Healthcare Industries
Logistics, Distribution and Transport Units
Light engineering/ Life sciences
Information technology (IT)
Development of Infrastructure related services

Extent of Project Investment

The investment in a single project would range between Rs. 50 lakhs to Rs. 300 lakhs.
The assistance amount under this scheme will be available for financing the items that are generally included in the total cost of a project, startup working capital and selectively for the core current assets during the commercial operation.

Contribution of Promoters

In the case of assistance provided in the form of Equity, the Promoter’s should hold at least 60% of the paid up equity capital of the company or Unit, which means assistance under this scheme would be to a maximum of 40% stake in the target company or unit.
In the case of project assistance in the form of the convertible debenture, the maximum Debt-Equity ratio in the project would be 1.5:1.

Security

The security to be taken against the sanction of assistance amount under the fund would be advised by the sanctioning authority.
In case of project investment in the form of debentures, then the security could be held are a mortgage of the fixed assets and hypothecation of the movable assets of the assisted unit and/or also pledge of share values of the promoters and individual guarantee of the promoters.

Also read, ELSS – Equity Linked Saving Scheme

Period of Investment

The investment would be for a minimum period of 5 years after which the Corporation would have the exiting option from the investment. The exit option would be by way of share buy-back by the Promoters or IPO or by sale to a vital or a financial investor or other such modes which the Corporation would deem fit.

The Exit Option Process

During the exit process, the value of the Corporation’s investment would be taken as the highest value that would be arrived by the calculation in any of the following manners:

The number of shares held by the corporation multiplied by the book value of the share as per last audited financials of the company.
The investment amount plus minimum interest for the investment period at the rate of average PLR of the Corporation during the investment period.
The value of investment calculated on the issue price of the share in case of an IPO.
The price as negotiated with a strategy of a financial investment as the case may be.
Any other method as approved by the Director’s Committee, at the time of exit.