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.