Impact investment fund Lok Capital has recently closed Lok Fund II, a $65 million fund focused on microcredit, mobile payments, remittances, small business lending, low-cost healthcare, education, and vocational training. Lok Capital’s previous fund was $22 million, which has invested in RuralShores, Ujjivan, Basix, and Janalakshmi. Lok Capital closed its second fund, Lok Fund II, at $65 million, the Mumbai-based impact investment-focused venture capital fund announced on Wednesday.
Lok Fund II is being anchored by existing investors, including International Finance Corporation, CDC, and KfW, as well as new investors Proparco and ASN Novib, according to a press statement released by the venture capital fund.
“The need for building sustainable enterprises providing access to quality health, education and creating employment opportunities to the base of the pyramid is more critical now than ever,” Venky Natarajan, managing partner, Lok Advisory Services, said in the statement.
The social VC fund will look to deploy capital in full-service financial institutions, micro-credit, mobile payments, remittances and small business lending. It will also look for investment opportunities in the low-cost healthcare, education and vocational trainingsectors.
Investments under the new fund will range between $2 million to $4 million, with an investment horizon of four to six years.
“Lok Capital is committed to partnering with entrepreneurs who are setting up and running profitable businesses while empowering the base of the pyramid,” Natarajan said.
Social venture capital funds typically have longer horizons and lower return expectations than venture capital funds that invest in more commercially oriented sectors. Internal rate of returns generally hover between 10% and 15%, as against the 20%to 25% for mainstream funds.
2012 is expected to be a blockbuster year in terms of investments by social venture capital funds, with the consensus being that fund corpus and deal sizes are both expected to grow exponentially, as compared to last year, which saw them adopt a much more cautious investment strategy due to the troubles faced by the Indian microfinance sector.
Investor-backed social venture capital funds cut down on their investment play in 2011, compared to their activities in 2010, as they struggled to identify companies that balanced social benefits as well as financial returns.
The dip in social venture deals was a sharp contrast to the marked increase in investments for 2011 across the venture capital industry in India. Across all sectors, investors closed 209 venture deals worth $1.09 billion compared to $699 million invested across 132 deals in early-stage companies in 2010.
Other impact investment funds such as Aavishkaar and Grassroots Business Fund have also laid out ambitious plans to deploy capital in Indian social enterprises.
Lok Capital’s first fund was a $22 million fund which was deployed fully by 2010.Recent plays include a $3 million investment in rural business process outsourcing (BPO) firm RuralShores. It also has invested in companies such as Ujjivan, BASIX and Janalakshmi. http://articles.economictimes.indiatimes.com/2012-01-25/news/30663052_1_venture-capital-funds-lok-capital-venky-natarajan