Indian based Venture Capitalists, Aavishkaar Capital (Aavishkaar) in partnership with KfW, a German state-owned investment and development bank, have unveiled a $250M “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 transformation 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.
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 the value chain while providing catalytic capital across the capital structure, for mid-market businesses.
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 to 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.”