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Business deals

Dutch bank offers $42m in backing to Indian impact investor

FMO eager to join hands with microfinance asset manager Aavishkaar

  © Reuters

CEBU, Philippines -- Dutch development bank FMO has proposed to invest $42 million in Aavishkaar Venture Management Services, India's biggest impact investor by size of investments, according to a disclosure.

The proceeds of the funding will be used to provide capital buffer needed to grow the loan books of the underlying nonbank financial institutions of Aavishkaar, FMO said in its investment proposal.

Aavishkaar is a holding company and an asset manager that provides microfinance, SME lending, fintech, fund management, advisory, and consultancy. It is expanding its business activities into South East Asia and Africa.

"Aavishkaar provides both access to finance for underbanked individuals and businesses mainly in India and facilitates investment or directly invests into inclusion focused companies through equity funds," FMO said.

Founded in 2002, Aavishkaar has made more than 58 equity investments across sectors and geographies including South Asia, and has raised six funds delivering commercial returns with close to $300 million assets under management.

It is currently raising capital for two of its funds -- the $200 million Aavishkaar Bharat fund, an India-specific fund, and a $150 million Africa fund.

In November 2017, Aavishkaar raised $95 million in the first close of its $200 million Aavishkaar Bharat Fund, the firm's sixth fund. It announced an investment of about $5.4 million in Kottaram Agro Foods, a Bangalore-based packaged foods startup that markets its products under the brand 'Soulfull' in March 2018.

It also invested $6.5 million as part of the Series-B round of funding raised by Nepra Resource Management Pvt Ltd.

Aavishkaar follows a consistent investment strategy in all the markets it invests in, where about 35% of the fund will be invested in financial services, 30% in agriculture and 30% in energy and health.

FMO said its proposed $42 million investment "provides capital to support Aavishkaar's next growth stage."

The Dutch lender has been actively investing in India's financial sector. In July, it proposed to invest 1.2 billion rupees ($18.2 million) in Indian financial services firm Aye Finance to support the expansion of its loan portfolio in the country.

The proposed investment, which will be in the form of a loan, is fully dedicated to supporting Aye's financing to microentrepreneurs in manufacturing and service clusters in India.

DealstreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently announced the acquisition of a majority stake in the company.

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