Global non-profit VC investor has announced a strategic tie up with US Agency for International Development (USAID) to flow of up to $15 million (Rs 79.5 crore) in private debt capital to social enterprises working to provide critical goods and services to the underserved across these regions.
Under this agreement, USAID’s Development Credit Authority will partially guarantee loans offered by banks or non-traditional capital providers to approved social enterprises within Acumen’s portfolio. Acumen will leverage its investment expertise and global networks to aid its investees in sourcing and securing loans that will qualify under the terms of this agreement.
“Our work has shown us that in order for these local enterprises to be transformational and sustainable, access to different types of capital is essential,” said Raj Kundra, deputy chief investment officer at Acumen Fund. “We look forward to facilitating this additional access to financing alongside USAID.”
This move will increase the limited number of financing options available for social enterprises.
“Ultimately these loans will deepen the credit history of these enterprises, helping them secure non-guaranteed loans in the future,” said Ben Hubbard, Director of USAID’s Development Credit Authority. “Additionally, the guarantee will help to prove the viability of this sector, encouraging local commercial banks and non-traditional lenders to continue investing in social enterprises without donor involvement.”
This partnership between Acumen and USAID has a 10-year term in which all loans will be placed over the next four years to the enterprises in Acumen’s portfolio.
Founded in 2001, Acumen Fund is known to invest in social enterprises globally. It has globally invested about $75 million in 69 companies. Some of its Indian portfolio companies include Avani Bio Energy Pvt. Limited, a company that creates conservation-based livelihood opportunities by using renewable energy and other technologies to enhance the lives of low-income households in the Kumaon region; Edubridge that aims to bring unskilled rural workforce a link to formal sector entry-level jobs; Hippocampus Learning Centres (HLC), which provide pre-school and primary education coaching in rural areas and Husk Power Systems that uses rice husks for rural electrification among others.
(Edited by Prem Udayabhanu)