Exclusive: Impact investor Caspian to raise $18 mn equity capital for its debt fund

Hyderabad-based impact investor Caspian is in early stages of discussions with new and existing investors to increase the corpus of its impact debt fund, a person close to the development told TechCircle.

Caspian Debt, the debt investment arm of Caspian, has begun the process to raise a total of Rs 130 crore -- or $18.24 million at current exchange rate -- in equity funding from international and domestic investors. Several existing investors are likely to participate in the new round, which is expected to witness partial exits from some of its investors. The company aims to raise Rs 100 crore of primary capital while the rest will go towards the partial exits.

The social impact debt provider had earlier raised equity capital from SIDBI's (Small Industries Development Bank of India's) social-impact venture capital fund Samridhi Fund and a slew of foreign DFIs (developmental finance institutions) including Dutch development bank FMO and Overseas Private Investment Corp, the US government’s development finance institution. Its other investors include European lender Triodos Bank, social venture investment firm fund Gray Ghost Ventures, and a number of domestic public and private sector banks and NBFCs.

Caspian Debt is building a tech product for internal data analysis, specifically to decipher large data sets and evaluate credit parameters to fast-track investment processes. Additionally, the technology tool will also make it more convenient for startups to apply for loans. Capital from the imminent equity round will go primarily towards building this technology product, investing on its expansion plans and strengthening its lending books, the source mentioned earlier said.

The company is in the process of setting up regional offices in Bengaluru and Delhi-NCR.

Caspian Debt attempts to solve the problem of access to finance for professionally-managed SMEs (small and medium-sized enterprises) and lending firms by offering customised debt through its NBFC licence. It provides loans in the range of Rs 1-15 crore to financial institutions and SMEs who would otherwise require mortgage collateral to avail loans from traditional lenders while venture capital firms would look for a blue-blooded investors in the firm to fund them, which typically doesn’t happen with social or impact enterprises.

Launched in 2013, the debt vehicle has invested in about 135 companies across sectors such as food and agriculture, clean energy, healthcare, education and financial inclusion.  It looks at businesses with an annual revenue of Rs 3-4 crore for a services company and Rs 5-6 crore for a product company. 

Caspian Debt has deployed about Rs 1,500 crore till date, and currently has an outstanding balance sheet of about Rs 500 crore. Half of its portfolio by outstanding is loans made to other retail financial institutions and the other half is into SMEs.

Caspian Debt is promoted by Caspian Advisors, a pioneering investment management and advisory services company, focussed on managing investment funds in the financial inclusion space in India. Other than Caspian Impact Investments, the firm runs three other funds in India such as Bellwether Microfinance Fund, India Financial Inclusion Fund and Caspian SME Impact Fund. Caspian Impact Investments is the legal entity behind Caspian Debt.

Last year, the Caspian Debt partnered with Netherlands-based lender Rabobank to create a new fund Rabo-Caspian Agtech Financing Fund to offer customised debt solutions to companies operating in the agri tech space in India. The fund, with a pilot corpus of Rs 15 crore, focusses on data-driven agri tech companies delivering products and services that help smallholders improve productivity and income

The debt arm currently manages the largest pool of capital and team at Caspian.