Global impact investment firm Social Finance has launched its first two India funds that will each raise $1 billion (around Rs 7,400 crore at current exchange rates).
Social Finance said in a statement that the first fund will be called India Impact Fund. In partnership with the United Nations Sustainable Development Goals Finance group, it will raise $1 billion to target equity funding for small lenders in priority sectors, namely agriculture, MSME, education, housing, social infrastructure and renewable energy. MSME stands for micro, small and medium enterprises.
The second fund of $1 billion - India Education Outcomes Fund - will focus solely on education.
The fund aims to improve learning outcomes by technology-aided interventions in subjects such as mathematics for children in classes 6-10 and improving completion rate of girls till class 10 in government and affordable private schools.
Govind Sankaranarayanan, former chief operating officer of Tata Capital, has been appointed as chief executive of Social Finance India. Sankaranarayanan had resigned from the financial services firm in August. He had held various positions during a two-decade stay at the Tata group.
Social Finance India is an impact investment intermediary creating products for positive social and environmental outcomes in the country. It is a part of not-for-profit organisation Social Finance.
Charitable organisation Tata Trusts and impact investment firm Omidyar Network have backed Social Finance India, according to the statement.
The board of Social Finance India includes IDFC Bank managing director and chief executive Ashish Lall, private equity firm ChrysCapital’s founder Ashish Dhawan, and Vikram Gandhi, former vice chairman of investment banking and global head of financial institutions business for Credit Suisse.
“India is ground zero for meeting the challenges of the UN SDG goals [Sustainable Development Goals] and Social Finance India will catalyse different types of innovative financial instruments and financial intermediaries to help bridge funding gaps across a range of sectors,” said Sankaranarayanan.
“An important part of this effort will be the sharpening of our focus on outcomes and improving the sophistication of impact measurement,” he added.
Impact investment
According to a report by consulting firm McKinsey, social impact funds had invested over $1 billion (Rs 6,400 crore) in India for the second consecutive year in 2016 (the latest year for which data is available). There was a jump in the average deal size, but the volumes remained flat.
The total value of social impact investments between 2010 and 2016 was $5.2 billion. The report added that there were over 50 active social impact funds and the segment had the potential to grow 20-25% per year to touch $6-8 billion by 2025.
Notable social impact investment firms in India include Unitus Ventures (formerly Unitus Seed Fund), Aavishkaar Venture Management,, Acumen, Accion International and LGT Venture Philanthropy.