International Finance Corporation (IFC), the private investment arm of the World Bank, is investing $15 million in Aavishkaar Goodwell India Microfinance Development Company Ltd, a microfinance focused private equity fund in India, VCCircle has learnt. Aavishkaar Goodwell is a joint venture between India's Aavishkaar and Dutch firm Goodwell Microfinance Development Company.
Aavishkaar Goodwell is in the midst of raising its second fund, Aavishkaar Goodwell India Microfinance Development Company II, of $100 million in size. IFC will take a final decision about the investment in its board meeting scheduled on May 28, 2010.
The new fund is much bigger in size compared to its first fund. Aavishkaar launched its first fund in 2006, and closed it at $18.3 million in May 2008.
The fund will be managed by AGI Services Ltd, which is led by five partners based out of India and the Netherlands. It has a large investment team in India consisting of 10 investment professionals. The new fund plans to provide long-term capital to microfinance institutions.
Aavishkaar Goodwell has already made quite a few investments in India's MFI space. One of its recent investments include Shre Pathrakali Finance Co Pvt Ltd (SPFCL), a Chennai-based MFI. Prior to that, it invested in Suryoday Microfinance in Pune and Asomi Finance in Assam.
MFI-focused PE funds are increasingly looking at areas where there is a low concentration of such institutions. India Financial Inclusion Fund (IFIF), another similar fund, has invested in MFI's like Udaipur’s Sahayata Microfinance and Allahabad’s Sonata Finance.
IFC, on the other hand, has also been very active in India in recent times. The fund has been investing in MFIs and other socially and environmentally relevant sectors like clean energy. It has recently announced its plan to invest $1.25 million (around Rs 5.5 crore) in Husk Power Systems (HPS), a Patna-based company engaged in rural electrification and power generation. Prior to that, it has announced Rs 35 crore investment in AU Financiers, a Jaipur-based non banking finance corporation (NBFC) in early this month.