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Lok Capital raises Rs 300 crore for new fund, targeting Rs 700 crore

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Lok Capital raises Rs 300 cr for new fund
BENGALURU: Lok Capital, the Rockefeller Foundation-backed impact investor, has raised $40.5 million (Rs 300 crore) as part of the first close of its third India-focused fund. Lok Fund III, which hit the fundraising trail early last year, has a final target corpus of Rs 700 crore and expects to raise the remaining capital commitments in the next 12 months.

Investors, or limited partners (LPs), who have invested in the new fund include development financial institutions such as France-based Proparco Netherland's-based FMO and UK's CDC Group. While both CDC and Proparco are existing Lok Capital investors, TIAA Global Asset Management is a new investor in the fund.

With Lok Capital’s Fund I and Fund II, it will bring the total capital under-management to over $125 million or Rs 840 crore.

Lok Capital expects to deploy the fund in next five years, targeting investments ranging from $2 million (Rs 13.4 crore) to $10 million (Rs 67 crore). The firm is looking to invest in financial services, healthcare and agriculture space.

“Aided with the government initiatives from the last few years along with very progressive regulatory environment, the climate is ripe in India for deepening financial inclusion through both traditional business models as well as through fin-tech models," said Venky Natarajan, managing partner at Lok Capital.

Four of Lok’s portfolio companies - Equitas Holdings, Suryoday Microfinance, Ujjivan Financial Services and Utkarsh Micro Finance - got small finance bank (SFB) licenses in 2015. Two of these companies, Equitas and Ujjivan, also had a public listing in 2016 giving Lok Capital a partial exit.

According to a statement, Lok has fully returned $22 million corpus from Fund I with a USD IRR of 15%. Fund II is presently tracking gross returns of 28% in USD terms.

“We seek to generate financial return along with measurable social and environmental outcomes by focusing on sustainable, commercial enterprises that provide basic products and services to low-income and underserved populations globally. This strategy aligns very well with our portfolio objectives and complements our decades-long commitment to responsible investment,” said Rekha Unnithan, Impact Investing Portfolio Manager at TIAA Global Asset Management.
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