Intel arm buys stake in Chennai's Real Image

Economic Times, Times News Network, Mumbai | Thursday, 25th May 2006

Intel Capital, the venture capital arm of Intel Corp, has picked up a stake in Chennai-based video and audio processing company Real Image Technologies through its $250 m India Technology fund.

The new India-based fund was set up in December '05, and has invested in Mauj.com and Mobiapps Holdings. The fund has also made follow up investments in existing Intel Corp investments in India such as Maya Entertainment and Persistent Systems.

"The outsourcing of work to India, has created a fairly large base for use of technology. And there are several technology start-ups in the market. We are looking at funding these companies," Arvind Sodhani, president Intel Capital, told ET. "We make investments across the life cycle of the investment chain of a company.

We might do investment at the initial level and continue right up to the time the company goes public. We also made investments in some public companies in India, but this is a small portion of our investment portfolio," he says. Intel Capital boasts of a presence in more than 30 countries across the world with more than 200 people working on investments only. Intel has a dedicated country specific fund in India, China, and Brazil.

The company also invests in other countries but does not have a dedicated fund to invest there.

"We are very bullish on emerging market countries and have therefore set up funds there," Mr Sodhani added. Intel employs six people for managing its venture fund in India. They are not general partners as they don't share the upside of the investment of the fund. Every investment proposal made by any country has a two level of approval process at Intel Capital.

Intel Capital has to first take the investment proposal to what is called a deal concept meeting, where the details and issues of the proposal are finalised. Then the proposal goes to investment project approval committee. Here the final decision on the investment is taken - at this level people like the treasurer of Intel Corp are involved.

Intel Capital does not take more than 30% stake in any company and most of its investments are at around 20%. A minority interest in these companies means that Intel does not have to consolidate the balance sheet of the companies it invests in with itself.

The investment are recorded in the balance sheet at cost or at the recent valuation done in the rounds or market.

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