Lok Capital part exits investment in rural BPO firm RuralShores with 6x returns

Lok Capital Fund I, a fund managed by impact venture capital firm Lok Capital, has exited its five-year-old investment in rural business process outsourcing (BPO) firm RuralShores Business Services Ltd by selling its holding to an unnamed buyer, as per a press statement on Tuesday.

The VC firm also owns a stake in RuralShores through a separate fund and remains invested in the company.

It did not share exact investment details but said it made 6x returns in rupee terms.

Sources said initially it put in Rs 1.35 crore in 2009 and later brought in Rs 50 lakh more in 2010. Both these investments were through Lok Capital Fund I. This means it part exited for Rs 11.1 crore. This would translate into around 4.6x returns in dollar terms.

Since its inception in 2004, Lok Capital Fund I was primarily invested in microfinance companies. RuralShores was Lok Capital’s first foray into such investments.

Venky Natarajan, managing partner, Lok Capital, said, “RuralShores brought the right elements to become the anchor investment for Lok’s portfolio outside of microfinance. This investment proves that livelihood generation is a sustainable way to create inclusion among the low-income group. The model is replicable in various sectors and has the potential to open up endless opportunities to create impact.”

Lok Capital through its second fund had separately put in Rs 13.5 crore into RuralShores 2011.

Lok Capital, which manages two funds with a total corpus of over $85 million, had in the past invested in companies like Ujjivan, BASIX, Janalakshmi and Ashirwad. Last year, Lok Capital had exited its investments in two firms—Satin Creditcare Network Ltd and Janalakshmi Financial Services Pvt Ltd.

Last year RuralShores also received funding from IT major TCS. HDFC is another early investor in the firm.

Established in May 2008 by Murali Vullaganti, RuralShores was created with an aim to bring jobs to villages. The firm runs a rural BPO with 18 delivery centres and employs over 2,500 rural youth. Women constitute 45 per cent of the RuralShores’ workforce.

The company has also been able to climb the BPO value chain. Having started providing remote processing of non-critical business transactions, it has diversified into higher-end BPO services in customer care and payroll management. RuralShores serves over two dozen clients, including leading telecom and IT companies, as well as the government.

It saw revenues swiftly rising from Rs 40 lakh in FY09 to Rs 31.5 crore for the year ended March 31, 2013.

Talking about the association with Lok Capital, Murali Vullaganti, founder, RuralShores, said, “It is commendable how Lok Capital saw the potential in this idea – of generating livelihood in rural areas through the BPO business model – and came in as an early stage investor.”

(Edited by Joby Puthuparampil Johnson)

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