TUESDAY · JANUARY 23·201'8 Funding 'inventions' that solve …pressclip.nddb.coop/PRC Press...
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AHMEDABAD
BusinessLine TUESDAY · JANUARY 23·201'8 2
Funding 'inventions' that solve grassroots issues With major global ambitions, Vineet Rai wants to make Aavishkaar the go-to impact fund
N RAMAKRISUNAN ing at a $300·million Asia fund by 2021.
headquartered fund, which started out at around the same time he launched Aavishkaar, in 2001. Now, he says, Abraaj is managing 'over $11 billion and its new fund is going to be the same size as it had raised in the last 16 years. Vineet Rai, Managing Partner &
CEO, Aavishkaar, which ' invests in ventures that solve problems for people at tQe bottom of the pyramid, has set his sights .on a larger global play. Aavishkaar has been investing in ventures in Sri Lanka, Indonesia and Bangladesh for about two years. It now
'plans to raise a $150-million Africa. fund in 2019 to invest in ventures in sub-Saharan Africa and is also look-
Why invest abroad when the opportunities in India itself are enormous and the unmet de· mand is huge, you ask him. The
opportunity in the US is huge, but Mc·
Donald's is in India, right, he argues. Likewise, with Uber which has enough to do in America, he con-tinues. He
points to Abraaj, a Dubai-
"Why would we not have the ambition to be the world's largest impact . fund when we have the oldest impact fund," asks Vineet.
Getting into social sector He says globally the need for funds that invest in social enterprises is huge, around $2:5 trillion every year. Mainstream ven· ture capital and private equity funds are getting into the social sector.
For instance, global private equity player TPG will be man· aging the $2-biUion The Rise Fund. Though Aavishkaar has more experience in investing in social enterprises, it does not have the brand equity of a TPG, says Vineet, adding that there is an opportunity for Aavishkaar to
. become much better known. "If we don't do that, we will con-
.. "Why would we not have the ambition to be the world's largest impact fund when.we have the oldest Impact fund?" VINEET RAI Managing Partner & CEO. Aavishkaar
tinue to remain small," he adds. He wants to make Aaviskhaar the go-to company for managing or handling large impact funds in future.
He maintains that India remains the priority for Aavishkaar, butthat does not mean it will ignore international opportunities. "It is doing India and going international,"· he says.
Aavishkaai has so far raised $20Q million through five funds. In 2017, it achieved a first close of $95 million of a $200-million Aavishkaar Bharar Fund. This fund will have to raise the remaining $105 million in the next 12 months: Aavishkaar invests in
· six sectors- financial services, · clean energy, water and sanitation, agriculture and rural business, healthcare, and education and vocational training.
Overseas expansion It will continue to focus on these sectors, even when it expands its presence in Asia and enters subSaharan Africa. So far, Aavishkaar has invested in 58 companies and exited its investments in 23, leaving it with a portfolio of 35 companies. From its exits, it got an average of 3.3
'. times return in dollar terms, which, says Vineet, is quite a good retllrn.
Aavishkaar will invest in 15 · companies in the next 3-4 years.
On Aavishkaar's investment strategy, Vineet says it will invest in a venture right from the idea stage. Most often, Aavishkaar is the first investor in a venture. It writes cheques from '{2-3 crore up to {IOO crore .. Once it closes · the $200-million Bharat Fund, it will be able to write even larger cheques, according to him.
The Aavishkaar-Intellecap group has a network of companies that provide eq,-!ity financing, venture debt and consultancy.The group's subSIdiaries include Arohan, a microfinance company; IntelleGrow, a venture debt company; and InteJIeCash, a microfinance incubation company.
Vineet believes that financial services will continue to remain one of the most attractive sectors for both entrepreneurs and investors.
Target areas . There may be more innovations, emerging models and new thought processes. He also believes that affordable housing will be a large sector, probably bigger than even micro finance, given the thrust that the Centre is giving to it.
"We believe that agriculture across the board is going to be a huge sector, given the significant change in the palette of Indians. We are eating different food now. and the innovation that
will take place in that space is going to be Significant," says Vineet.
Ahother sector that Aavishkaar expects serious action is logistics. This will not b? typical logistics companies, but those that create value for a farmer. For instance, he says, Aavishkaar.
. has invested in Ergos, which is building an integrated agricul· ture supply chain and has created a network of micro-ware· houses close to farm lands in Bihar. "What you have to do is define your area," says Vineet.
For example, he says, /'.avishkaar has invested in Connect India, which is building the last mile distribution network for ecommerce companies like Amazon. "Connect Iridia is creating massive jobs in rural India through an entrepreneurial opportunity." It is also allowing a rural Indian to have access to the same product from an ecommerce company like Amazon that urban Indians can easily buy. And, it is expanding the market for e-commerce com panies, adds Vineet.
According to him, Aav· ishkaar's assets under management has crossed $300 million, while that of the Aavishkaar~ln: tellecap group's is over $650 million. By this fiscal year-end, Vineet reckons that the group's assets under management will be in excess of $800 million.