Aavishkaar Goodwell Hits Road to Raise $100M Fund

Mar 2010
Noida, India, March, 08 2010 - The MFI-focussed player is spreading its focus to housing finance firms and technology firms in the social space.

Aavishkaar Goodwell is hitting the road with its new fund which is seeking $100 million in commitments. The second fund from Aavishkaar Goodwell, a joint venture between India's Aavishkaar and Dutch firm Goodwell, is much bigger in size compared to its first fund. The firm launched its first fund in 2006, which raised $18.3 million in May 2008.

Vineet Rai, founder and the CEO of Aavishkaar, told VCCircle in an interview that the fund is planning to close by December this year. The fund will target limited partners (LPs - investors in private equity & venture capital funds) like development financial institutions and pension funds. "DFIs continue to remain excited while pension funds, especially Dutch, have also started allocations towards microfinance," said Rai.

Aavishkaar Goodwell is expected to tap its existing investors which include International Finance Corp, Blue Orchard, Netherlands Development Finance Company (FMO), and Deutsche Bank. Besides microfinance, the new fund will also look at technology enabling companies and housing finance companies in the social context.

Aavishkaar Goodwell will also back MFIs looking for an inorganic growth path. "We are also focused on targeted M&A financing, where we will invest leading to a merger and acquisitions," said Rai.

Indian microfinance has been attracting investments from a variety of investors like the sector-focused players like Aavsihkaar to soveriegn wealth funds like Temasek and venture capital majors like Sequoia. Indian MFIs have attracted the strongest investor interest with 30% of all microfinance equity transactions in 2009, according to a report by CGAP, a microfinance group based at the World Bank, and J.P. Morgan.

The larger fund would allow Aavishkaar Goodwell invest in its portfolio companies throughout their stages of funding, from early to growth. Aavishkaar Goodwell could invest up to $10 million in a company throughout its life. But the fund will continue to focus on investing in MFIs at early stages, being the first institutional investor. The new fund will also invest in the existing portfolio companies going for further rounds.

Among its current portfolio are companies like Share Microfin, Bhartiya Samruddhi Finance and Equitas, which are some of the largest MFIs in India.

Aavishkaar Goodwell has also been investing in MFI startups in relatively untapped areas of North and Western India. One of its most recent investments was Shre Pathrakali Finance Co Ltd, a Varanasi-based microfinance start-up, also known as Utkarsh. In July, it also invested in Pune-based Suryoday Microfinance (SMF), an MFI started by three former bankers.

Aavsihkaar also manages Aavishkaar India Micro Venture Capital Fund, which raised $15 million in 2009. This fund has investments like Zameen Organic, an organic cotton trading company; Swas Healthcare, a chain of naturopathy clinics and hospitals and Saraplast, a sanitation solutions provider.

MFI focused fund managers like Caspian Advisors and Elevar Equity have recently managed to close their funds. India Financial Inclusion Fund (IFIF), advised by Caspian, raised its new fund last year at $90 million. Elevar has also managed to raise Unitus Equity Fund II.

Source : VCCircle

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