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Aavishkaar Capital and KfW announce the launch of USD 250 Million “ESG First Fund” to help emerging mid-market businesses scale in a global market

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By Staff Writer

Indian based Venture Capitalists, Aavishkaar Capital (Aavishkaar) in partnership with KfW, a German state-owned investment and development bank, have unveiled USD 250 million “ESG First Fund” focused on strengthening the Environmental, Social and Governance (ESG) practice of mid-cap businesses while offering them flexible capital to scale to new markets.

Leveraging on the global drive for sustainability and equality, the ESG First Fund is a fund focused on investing in Africa and Asia with the mandate of generating superior ESG outcomes and commercially viable financial returns alongside positive social impact.

The ESG First Fund will seek to provide transformational capital which can be invested across the capital structure, helping businesses improve their ESG standards so that they can capitalize on the increasing consumer preference for ecologically-conscious, gender-equal and purpose-driven businesses and meet increasing demands on corporate due diligence in the course of regulatory measures in the European market The Fund aims to partner with mid-cap businesses and entrepreneurs sharing Aavishkaar’s goal for enhanced ESG standards to deepen their access to markets in Europe. The ESG First Fund is in general open to all sectors, but focuses on those with high exports towards Europe.

(L-R) Ashish Patel, Managing Partner ESG First Fund, Aavishkaar Capital and Margaret Nakunza, Marketing Officer Sankalp Forum Communications during the official launch of the USD 250 million ESG First Fund by Aav

The Fund is a global initiative with an investment process centred on ESG, gender equality and climate change goals. The Fund investment strategy aims to measure ESG improvements across value chain while providing catalytic capital across the capital structure, for mid-market businesses.  The fund will go a long way in scaling businesses especially exporters in the agriculture, apparel and sustainable supply value chain in Uganda, by strengthening their ESG capacity to win in the global market. With agriculture being the backbone of Uganda’s economy, this initiative will also help boost the country’s economic growth.

Commenting on behalf of BMZ, Federal Ministry for Economic Cooperation and Development Germany, Anosha Wahidi, Head of Division 120 – Policy on sustainability in global supply chains, Commissioner for sustainability standards, said, “With our investment of 50 million euros, we want to help set up a fund that demonstrates that increased respect for ESG can be a viable investment and business model. The German government has passed a due diligence law that obliges German companies to pay attention to social and ecological sustainability in their global supply chains. Corresponding European regulation will follow. It is important to us that we do not exclude companies in other parts of the world from supply chains towards Europe, but rather enable them to participate in better due diligence management. The fund is therefore primarily intended to help SMEs in Africa and Asia to meet the growing demands from European companies. 

Aavishkaar Group Founder and Chairman, Vineet Rai said “ESG First fund takes forward the Aavishkaar Group vision to “Bridge the Opportunity Gap for the emerging 3 Billion” with its focus on ESG,  Africa- Asia region, flexible instruments, Gender and climate change. The ESG First fund underscores the unique partnership that Aavishkaar Group has built with KFW Group to develop rapidly innovative products and launch them quickly with trust and long term impact as the bedrock of this partnership.  As we launch this fund we exhort other development finance institutions looking to enhance ESG impact to join us in delivering significant impact and generate attractive returns whilst bringing about a significant positive change in the lives of the people.”  Aavishkaar Capital (Aavishkaar) is part of Aavishkaar Group Company and a global pioneer in taking an entrepreneurship-based approach to scaling businesses for impact.

Speaking about their investment in the ESG First Fund, Dr. Jan Martin Witte, Director, KFW said “We believe in the ability of purpose-driven, responsible capital to be transformative while creating attractive investment returns. This fund aligns with our focus on ecologically-conscious sustainable businesses that bring in financial inclusion and economic development, and will help us reach businesses globally that are impactful. With this initiative, funded by the Federal Republic of Germany, we want to improve the Environmental, Social and Working Conditions as well as the Gender Equality in the SME along the supply chain.”

Commenting on the investment, Ashish Patel, Managing Partner, ESG First Fund – Aavishkaar Capital said, “Our focus is to help businesses scale by allowing them to participate in the significant growth of consumer demand for ‘socially-conscious products’. We will support our partners develop stronger ESG standards and share the benefits of our south-south leanings. Additionally, our investment approach of providing flexible solutions across the capital structure will help businesses which may not be ready for an all-equity or all-debt solution, or where shareholders may not wish to dilute.”

About KfW:

KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 50 years. In this regard, KfW is both an experienced bank and a development institution with financing expertise, with expert knowledge of development policy and many years of national and international experience. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development (BMZ), KfW finance and support programmes and projects in developing countries and emerging economies – from their conception and execution to monitoring their success. KfW’s goal is to help their partner countries fight poverty, maintain peace, and protect both the environment and the climate and shape globalisation in an appropriate way.

About Aavishkaar Capital:

Aavishkaar Capital is an Impact fund manager focused on the Global South.

A pioneer in taking an entrepreneurship-based approach to scaling businesses for impact, Aavishkaar Capital’s unique approach has resulted in its invested enterprises impacting over 105 million lives (65% of whom are women) and creating over 300,000 jobs and livelihoods

Aavishkaar Capital invests in sectors such as Sustainable Agriculture, Financial Inclusion and Essential Services across India, Emerging Asia, and Sub-Saharan Africa. Aligned to 13 out of the 17 Sustainable Development Goals, Aavishkaar Capital has raised six funds, while generating commercial returns with over c.$400 million in assets under management.

Aavishkaar Capital is the impact investing arm of the Aavishkaar Group, the impact platform with presence in Microfinance, MSME Lending and ecosystem building across India, Emerging Asia and Sub-Saharan Africa. Aavishkaar Group with its vision to bridge the opportunity gap for the emerging 3 Billion, currently manages over USD 1 billion in Impact Assets across its platform. www.aavishkaarcapital.in

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