International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, proposes to invest $20 million or up to 20 per cent corpus of the Pragati India Fund, a private equity fund focusing on the eight poorest states in India.
Pragati India Fund Ltd is aiming to raise between $75-100 million, and will focus on the economically underdeveloped, low-income states of India, such as Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh and Orissa. These states are home to some 421 million people who are defined as ‘multi-dimensionally poor,’ according to the Oxford Poverty and Human Development Index.
The capital will be used by Pragati to expand into low-income states and rural regions where changing political, social and economic development dynamics offer new opportunities which are largely untapped.
With the infusion of these funds, Pragati India Fund also expects high developmental impact on the low-income states by flow of private capital to LIS, support of SMEs, private sector development, accelerated growth and job creation.
Incorporated in 2011, Pragati India Fund is led by Narayanan Shadagopan, who has been an investment banker in New York and London. A sector-agnostic fund, Pragati will primarily invest in areas like healthcare, ancillary infrastructure services, ancillary oil and gas services, manufacturing and education. The target companies will be at a stage where they require professional management and processes in order to grow. The PE firm, with offices in Delhi and Mauritius, will make investments in the range of $5 million-$15 million.
In October 2011, UK’s development finance institution CDC Group plc committed $50 million or Rs 245 crore as an anchor investor to Pragati Venture and Incubator Fund. The fund was utilised to make commercially sound investment opportunities in under-invested parts of India.