Insitor Impact Asia Fund – which deploys from its $34-million corpus raised in December 2015 – is looking at investing around 25 to 30 per cent of the capital in social sector startups/enterprises in Myanmar.
Insitor provides venture capital funding across emerging Asian countries in a variety of sectors, including healthcare, education, affordable housing, financial inclusion, water/sanitation, agriculture, and off-grid energy. It has so far invested in 11 social sector companies across Cambodia, India, Myanmar, and Pakistan.
SolarHome and Alliance Microfinance Institution are its two investee companies from Myanmar.
“In Myanmar we have successfully closed two investments and are aiming for another 1-2 by the end of 2020,” said Bradley Kopsick, Insitor’s Myanmar country manager.
Having an on-ground presence in Myanmar since 2013, Kopsick has observed that companies with a greater social impact are in sectors such as financial services and renewable energy while education and healthcare were catching up.
“Our goal is to use our investment capital, knowledge and expertise to help companies grow quickly,” said Kopsick.
“We have not seen as many opportunities in areas like water and sanitation, affordable housing, agriculture, where we were expecting to see a lot more ventures. Overall, we are looking for businesses that are providing goods and services to low income populations,” said Kopsick.
Insitor typically invests between $250,000 and $3 million per investment.
“We’ve looked at some fintech ventures and the potential is huge. There are still some competence and trust issues on the part of the public in using these services on their phones,” he said.
Apart from scouring the market for fresh deals, Insitor is also looking to make additional investments in its two portfolio companies in Myanmar – Alliance For Microfinance and SolarHome – to further enable their growth plans.
Insitor’s maiden investment in the country was Alliance For Microfinance in Myanmar, founded in 2014 as a partnership between FIDES of Switzerland and BASIX of India.
With the support of United Nations Capital Development Fund (UNCDF) and its current shareholders, Alliance is operating in Mandalay, Sagaing, Magway Region and Shan State with 20 branch offices.
Insitor participated in the first round of equity investment in Alliance, together with other investors in early 2017, followed by a second equity round of $5 million in August 2017. In July 2018, Insitor closed a debt investment round in Alliance.
In its second deal, Insitor invested $1 million in SolarHome, a Singapore-headquartered solar energy startup with operations in Myanmar. The investment was made through a convertible note offering. SolarHome provides solar power to over 20,000 rural households in Myanmar and plans to expand across the Philippines, Indonesia and Cambodia.
In the Asian region, Insitor is looking to close an investment in Pakistan in the near future. As an impact investor, Insitor works on investment timelines that are stretched in line with the returns milestones of social ventures. “Generally, our investment timeline is between five to seven years. We want to work together with the entrepreneur to find a way that our incentives are aligned and to exit in a way that it is beneficial for the company,” said Kopsick.
Insitor’s portfolio firms include Aashiyaan Housing and Development Finance, Aviom India Housing Finance, Biosense Technologies, Edubridge Learning and Mera Gao Power (India); Khmer Water Supply Holding, First Finance MFI, and Joma International (Cambodia), among others.
While Myanmar’s private equity and venture capital ecosystem is at a nascent stage, the country has witnessed increased activity on the impact investment front.
Some of the prominent international impact investment players with a presence in Myanmar include Omidyar Network, the International Finance Corporation, Base of Pyramid Asia, Danish Investment Fund for Developing Countries and CDC.
According to an assessment by the Asian Venture Philanthropy Network, a large amount of impact investment capital is available but there are a lack of investible deals in Myanmar.