India-focussed impact investment firm Lok Capital has marked the first close of Lok Fund III at $40.5 million.
With this close, the total capital under-management with Lok Capital incluging Fund I and Fund II will bring to over $125 million, the company said in a statement.
Existing LPs – CDC Group Plc, the development finance institution of the UK, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.’s (FMO) and Société de Promotion et de Participation pour la Coopération Economique (Proparco) – also participated in this funding round.
TIAA Global Asset Management has come in as a new investor in Fund III which has a total target corpus of around $100 million, which the investment firm expects to close in the next 12-18 months.
The fund will be deployed in the next five years and will focus on growth stage investments in financial services, healthcare, agriculture and livelihood. The average tranche per investment will range from $2-10 million, however, Lok Capital will continue to collaborate with LPs for joint investment in larger deals, as in Fund II.
“Aided with the government initiatives from the last few years along with very progressive regulatory environment, the climate is ripe in India for deepening financial inclusion through both traditional business models as well as through fin-tech models. By committing to the third fund, our investors have placed trust in the founding team, which has stayed together for the last 10 years and on our ability to stay disciplined while investing and managing investments,” said Venky Natarajan, Managing Partner, Lok Capital.
The areas of interest for Lok Capital in the healthcare space include delivery of affordable healthcare, devices and diagnostics in under-served regions. And, in the agriculture sector, the fund will focus on dairy, supply chain management and integrated farm-to-fork models.
Earlier this year, Lok invested in Pune-based Siddhivinayak (SV) Agri Processing, an end-to-end potato supply chain management company, marking its first investment in the agriculture sector. Fund III is expected to back more enterprises in the agri and dairy space.
Lok Capital said it has fully returned the committed capital of $22 million from its first fund with an internal rate of return of 15% in dollar terms. The second fund is currently tracking gross returns of 28% in dollar terms, with portfolio companies Equitas and Ujjivan going public. Some of its good exits include Satin Creditcare, Janalakshmi Microfinance and RuralShores.