Investors commit $90 million in Lok Capital's third fund

The fund has already deployed nearly a third of this capital

Impact investor Lok Capital has received $90 million in commitment from investors for its $100-million third fund, which is likely to make a final close in November, said a partner at the firm. 

Lok has already deployed nearly a third of this capital ($25 million to $26 million) since May last year after receiving $60.5 million from investors, said Vishal Mehta, co-founder and partner at the firm. 

It has earmarked another $5 million for follow-on funding in existing investments. Lok Capital had announced the first close for its third fund at $40.5 million in June 2016 but began investing earlier.  

In May, it led a $3.5 million funding in affordable housing finance firm Ummeed Housing Finance Ltd; in April, it invested in $10.23 million in Chennai-based Dr Mohan Diabetes Specialities Care. 

For the first time, Lok Capital is raising money from local investors, who are likely to contribute a quarter of this fund. In the past, 95 per cent of investments came from development financial institutions. 

Lok Capital raised $22 million in its first fund (2006) and $64 million in its second fund (2012). The first fund gave a return of 10 per cent in dollar terms and 15 per cent in rupee terms and was liquidated. 

"We have returned the entire principal of $65 million of the second fund and maybe a little more, to investors. We are clocking about 25 per cent returns in dollars terms,’’ says Mehta. He claims this makes Lok Capital amongst the most successful impact investors in India.

Aavishkar, a pioneer in this field, has raised five funds and deployed more capital ($250 million-$300 million) in India than Lok Capital. 

Backed by IDFC MD & VC Rajiv Lall (Lok was born before IDFC when Lall was leaving PE firm Warburg Pincus), the impact investor has had several exits, which has helped it post good returns.

FUND I: $22 million – 2006
 

Investment Focus: Financial inclusion +one livelihood investment

Investments & status
 

1. Janalakshmi  Financial Services- Exited

2. Asirvad Microfinance -  Exited

3. Spandana Spoorthy – Exited

4. Arohan Microfinance - Exited

5. Bharathiya Samruddhi ( Basix) -  Write Off

6. Satin Creditcare - Exited

7. Suryoday Microfinance - Exited

8. Ujjivan Financial Services - Exited

9. RuralShores - Exited

Fund I of $22 mn has been fully returned to investors at an IRR of 15% and is liquidated

FUND II: $65million –Jan 2012
 

Investment Focus: Financial inclusion + broader inclusion

Investments & status

1.     Vistaar Financial Services - Exited

2.     Drishti Eye Care – Yet to exit

3.     Everest Edusys - Yet to exit

4.    IFMR Holdings - Exited

5.    MAS Financial Services

6.    Rural Shores - Yet to exit

7.    Hippocampus Learning Centres - Exited

8.    Utkarsh Microfinance - Yet to exit

9.   Aptus Housing Company – Exited

10. Ujjivan Financial Services– Exited

11. Equitas Holdings - Exited

12. SewaGrin - Exited

13. Livewell – Exited

14. SV Agri – Yet to exit

15. Veritas Finance - Yet to exit
 

Fund II of $65 million is tracking gross returns of 25%. The principal amount has been returned to the investors
 

FUND III: $40.5million –June 2016 
 

First Close: Financial Inclusion + Broader Inclusion:

New investments
 

1.  Ummeed Housing Finance

2.  Osam Dairy

3.  Dr. Mohan’s Diabetic Care

Follow-on investments

4. Utkarsh Microfinance

FUND III targeted corpus is $100million expected to have final close by November 2017