Mumbai: Impact investment firm Aavishkaar Venture Management Services (AVMS) plans to raise up to $150 million to invest in Africa, said a senior executive.
“We are looking to raise between $100 million and $150 million for the African fund. We will start the fund-raising around the middle of 2017 and we expect to close it in 2018,” said Vineet Rai, founder of Intellecap-Aavishkaar group.
AVMS is part of the Intellecap-Aavishkaar group, which includes other entities such as Intellecap, which offers investment banking, consulting and other services for the impact investment space; Intellecash, which provides working capital and business loans to small and medium enterprises; Intelligrow, a venture debt provider; and Arohan, a microfinance lender. Rai founded the group in 2001.
The Africa fund will be the second overseas-focused fund from the impact investor. It will also be AVMS’s seventh fund. Aavishkaar is currently raising a $75 million Frontier Fund, which will invest in South and South-East Asia, its first overseas geography fund.
The firm has so far invested around $4.5 million outside India, across three investments, Rai said.
Across its various funds, the firm has invested in companies such as dairy firms Osam and Milk Mantra, healthcare firms Mera Doctor and Vaatsalya, water and sanitation-focused companies Nepra Resource Management and Waterlife and several financial services firms.
The African fund will invest in businesses that focus on the low-income group, especially in sectors such as agriculture, financial inclusion, fintech, energy, healthcare and education.
“The focus will be on making commercial returns while making a significant impact and we will use the sow-tend-reap strategy of multiple round investing and will be an early investor,” said Rai.
The fund will be making investments in ticket sizes as low as $0.5 million to as much as $5 million.
Aavishkaar will focus on east and west Africa, specifically on countries such as Kenya, Tanzania, Rwanda, Ethiopia, Nigeria and Ghana.
The African fund is part of the Intellecap-Aavishkaar group’s plans to increase its assets under management (AUM) across equity and debt businesses to $3.5 billion by 2024.
“As a group, we had an AUM of $20 million in 2008. From that, we have grown to around $400 million in 2016. Over the next eight years, we plan to increase our AUM to $3.5 billion. Out of this, we are targeting around $1.5 billion through the various equity funds that Aavishkaar manages and will raise going ahead, while the remaining $2 billion will come from the various debt businesses—Intellecash, Intellegrow and Arohan,” said Rai.
The group’s plan to expand its AUM multifold comes at a time when the Indian impact investment space is expected to see a sharp pick-up in activity.
According to consulting firm McKinsey & Co., impact investing in India has the potential to grow from $1 billion worth of investments in 2015 to $6-8 billion by 2025. India’s impact investment space has seen $4.1 billion worth of cumulative investments in the past six years, according to McKinsey. The pace of investment is growing at 15% annually, it added.
Even as it focuses on raising new funds, Aavishkaar is also working on exiting its earlier investments.
“Till date, we have made 50-odd investments and we have exited around half of them. We have returned around $50 million through these exits,” said Rai.
More exits are in the works, said Rai, adding that Aavishkaar has around five exits lined up over the next five-six months.
In 2016, Aavishkaar recorded exits from portfolio companies such as Equitas Holdings Ltd, Suryoday Micro Finance Ltd and Utkarsh Micro Finance Pvt. Ltd, among others.