International Finance Corporation (IFC), the private investment arm of the World Bank, is considering a $15 million commitment to Aavishkaar Goodwell India Microfinance Development Company II, which is targeting commitments of $100 million.
Aavishkaar Goodwell II is a ten-year private equity fund focused on investing in enterprises active in India’s microfinance sector, according to IFC's website. The fund intends to provide long-term capital to microfinance institutions and other innovative enterprises that enable growth in the microfinance sector. It aims to increase access to finance for low income families in rural India.
Aavishkaar Goodwell is a joint venture between India-focused private equity fund manager Aavishkaar and Dutch social investment firm Goodwell Microfinance Development Company. The fund manager has five partners based in India and the Netherlands and an investment team of 10 professionals based in India.
Aavishkaar Goodwell closed its first fund on $18.3 million in May 2008.
India’s microfinance sector is increasingly attractive for private equity players. In the month of April itself, there have been two sizeable investments made in this sector by private equity firms in microfinance institutions that are already backed by Aavishkaar.
A consortium led by Matrix Partners India and including Holland’s Hivos-Triodos Fund and microfinance investor Lok Capital invested INR1.18bn (€19.3million; $26 million) in Bhartiya Samruddhi Finance, the flagship company of Hyderabad-based microfinance group BASIX. Aavishkaar invested in the company in 2009.
A week earlier, CLSA Capital Partners, the alternative asset management arm of investment bank CLSA Asia-Pacific Markets, invested $24 million for an undisclosed minority stake in Equitas Micro Finance India, a Chennai-based microfinance institution, in which Aavishkaar Goodwell invested in 2008.
Separately, in late March, UK-headquartered Leapfrog Investments, a microinsurance-focused private equity firm, closed its maiden fund on $112 million, beating its $100 million target. Of this amount, the firm has earmarked up to $30 million for investments in India, which the firm’s South Asia investment principal Jim Roth called “the largest and fastest growing microinsurance market in the world”.
In December 2009, IFC itself invested INR700 million in Financial Informational Network and Operations (FINO), an Indian banking technology provider, in partnership with HSBC Private Equity Asia and Intel Capital. FINO develops technology solutions and services to help financial institutions reach India's underserved sectors.