Caspian launches its first debt fund
Caspian Advisors is targeting $40 million for the first pure debt fund in India's social impact segment. The Caspian Impact Investments (CII) fund already has $10 million in commitments from FMO, Triodos Doen and Hivos-Triodos Fund and Gray Ghost Microfinance Fund, as well as local investors and the promoters.
Caspian will invest in specialised intermediaries that support enterprises across four sectors - microfinance, small business financing, food and agriculture and affordable housing. Of these sectors, only microfinance is a priority sector to which banks are mandated to lend money.
The firm has changed strategy with this fund, moving from a focus on microfinance equity to multi-sector debt.
"We saw an opportunity in the impact sector as companies have matured over recent years and could easily take on debt instead of diluting equity to finance expansion" said S. Viswanatha Prasad, Caspian's managing director.
The firm's previous two funds invested a total of $120 million in assets via equity in Indian microfinance institutions.
Loans will be extended at an interest rate about 2 percentage points above the rate at which commercial banks lend to such companies. The fund has already invested in a Bangalore-based financing intermediary that works with small businesses, said Prasad.
Caspian will also collaborate with Dutch non-governmental organization Hivos to improve the ability of producer organizations in the food and agriculture sector to access debt from the fund.
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