UTI plans to invest the proceeds of the fund in knowledge-based industries including software and E-commerce and related service areas.

Sebi has decided to amend the regulations to permit any statutory body to start a venture capital fund. The existing regulation did not permit trusts and statutory bodies to float venture funds. The amendment will help UTI to start its venture capital fund.

In recent months, with the stocks of the knowledge-based industries (particularly software and pharma) shooting into prominence, in India, venture capital funds have also come out of hybernation. The high-risk-high-return venture fund industry is gradually coming of age in India.

In the primary equtiy market, in recent weeks, a number of venture funds have come out with offer for sale of their stake in companies which they have nurtured for the last few years. In the process, not only have the venture funds made money by offering the shares to the public, new investors have also seen phenomenal appreciation in the value of their investments.