European Investment Bank (EIB), in one of its first private equity investments in India, has agreed to pump 100 million euros (Rs 886 crore or $120.5 million) in Neev Fund II along with the country's biggest lender State Bank of India (SBI).
The two entities have created the new Neev Fund II focused on climate action and sustainability business financing.
The private equity fund will invest up to 100 million euros in Indian SMEs offering solutions critical to the success of global climate action.
Neev Fund II will provide equity to SMEs focusing on mitigating climate risks, promoting social development, job creation, and gender equality at scale, said SBI chairman Dinesh Kumar Khara.
Under the management of SBI group company SBICAP Ventures, Neev Fund II will provide equity and quasi-equity capital to India’s emerging SMEs.
It will offer growth and expansion capital to companies offering solutions for clean energy, electric vehicles, efficient use of raw materials, and water and circular economy projects in the country.
SBI already invests in a vehicle called Neev Fund for impact investing.
In October last year, Neev Fund had secured 25 million euros (about Rs 220 crore) in limited partner commitment from EIB.
EIB is the lending institution of the European Union and is owned by the EU’s 28 member states.
Since the beginning of its operations in India in 1993, EIB has supported 26 projects in the country and invested close to 3.3 billion euros in transport, energy, agriculture, fisheries and forestry projects as well as in India’s SMEs.
EIB has also invested in a climate debt fund by Zurich-based impact investor responsAbility Investments AG.
In 2017, it partnered Yes Bank to float a $400 million (Rs 2,562 crore) co-financing programme for construction of solar power plants and wind farms across India.