India: Aavishkaar Plans $100m 3rd Microfinance Fund

Sep 2010
Bangalore, India, September, 19 2010 - Microfinance venture fund Aavishkaar Venture India is understood to be raising $100 million (Rs 458 crore) to set up a third microfinance-focused private equity fund through Aavishkaar Goodwell India, a joint venture with Dutch firm Goodwell Investments.

Aavishkaar is an India-focused fund that invests in microfinance entities and MFI enablers. The new fund is said to be targeting investments in microfinance institutions (MFIs), non-banking financial companies (NBFCs), and the cleantech, agriculture and rural infrastructure sectors.

The new fund will be a 10-year closed-ended PE fund that is looking at securing funding commitments from Aavishkaar Venture’s existing investors and financial institutions, according to investment experts tracking the microfinancing sector.

Aavishkaar Venture India chief executive officer Vineet Rai did not reply to an emailed questionnaire on the planned fund-raise.

The VC is presently mopping up funding commitments to the tune of $100 million for its second microfinance fund, Aavishkaar Goodwell II, which it expects to close soon. IFC is presently an anchor investor in Aavishkaar Goodwell II with a contribution of $15 million.

The possibility of a third microfinance equity fund arose after Aavishkaar Venture partially exited Chennai-based MFI Equitas last month by selling its stake to US-based Canaan Partners for multiple returns on investment. Aavishkaar also partially exited two portfolio companies, Servals Automation and Shree Kamdhenu Electronics, by selling its stake to US-based Grassroots Business Fund.

The VC’s first microfinance fund, Aavishkaar Goodwell India Microfinance Development Company, is a $18.3 million fund, which has so far made seven investments in the Indian MFI space. Aavishkaar also operates Aavishkaar India Micro Venture Capital Fund (AIMVCF), a micro equity fund of $14 million, with over 20 companies in its portfolio.

AIMVCF’s portfolio includes MFIs like Shree Pathrakali Finance, Suryoday Micro Finance, Grameen Koota and Bhartiya Samruddhi Investments among others.

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