KARACHI, Dec 28: Cyan Limited, a Dawood group listed company on the “non-life insurance” sector of the Karachi Stock Exchange, proposes to venture into private equity business through a separate subsidiary company.

Cyan Limited, which started out as "The Central Insurance Company Limited" announced on Tuesday that a proposal was approved at the meeting of board of directors held on Dec 24 to "undertake private equity business through a separate subsidiary company." Cyan Limited noted that the company currently manages an investment portfolio of Rs4.5 billion as on Sept 30, 2012.

The portfolio was stated to be heavily concentrated towards listed equities whereas the remaining funds were invested in money market instruments/mutual funds that provided a consistent and stable return on the portfolio and enabled curtailment of volatility of equity investments.

Moreover, the company observed that in line with the business plan of the company approved at the board meeting on July 28, 2011, Cyan's core objective was to provide equity financing to capital constrained, closely held companies in Pakistan.

The board had decided at the meeting on Dec 24 to constitute a Fund Management Company (FMC) to be known as "Cyan Equity Partners Limited" as a Non-Banking Finance Company (NBFC) for launching Private Equity and Venture Capital Funds and for providing Fund Management Services under the Private Equity and Venture Capital Fund Regulations, 2008, to operate as a wholly owned subsidiary of Cyan, subject to the regulatory approvals, fulfillment of all regulatory requirements and approval of the members of the company in a general meeting.

The board also decided to convene an extraordinary general meeting on Jan 24, 2013, where a special resolution would be proposed for the above purpose.

The draft resolution to be laid before the ExGM, among other things, proposes submission of a formal application to the SECP and the Registrar of Companies for incorporation of FMC with an initial authorised capital of Rs500 million. Further resolved that after the incorporation of the FMC, an initial equity investment of Rs30 million would be made in the FMC by subscription of shares at par value of Rs10 per share; to be increased from time to time pursuant to the decisions of the board of directors of FMC, depending upon the capital requirements of the FMC.

Shareholders would be told at the extraordinary general meeting that given a complete dearth of institutional capital for growth stage companies, Cyan was well positioned to capitalise on investment opportunities.