TC-I FundWatch

Here is a recap of the major investment activity in India’s social venture space and also traditional investment that will directly affect the poor:

Social

  • Chennai based Equitas will secure $12.5 million in funding from two private equity firms over the next few months. The organization intends to use the money to expand its branch office footprint in Southern India.
  • Building upon the increasing interest by both domestic and foreign capital in top tier MFIs, the Ford Foundation and Intellecap have created “Making My MFI Investment Worthy” that will identify and handhold 10 MFIs over the next 2 years to scale them up to where they are attractive to commercial investors.
  • While this story is a little unrelated, Citi — the major US bank — has committed $1.5 million to the Indian School of Business to promote financial inclusion for small investors and enterprise.

Traditional

  • The Indian government is investing a $2 billion fund for expanding broadband internet to rural India. $1.5 billion should come from the private sector.
  • Intel Capital has invested $2.5 million in a new online education company titled Vriti Infocom.
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Evening Edition

  • A new United Nations report, Redefining AIDS in Asia: Crafting an Effective Response, was just released and makes an astonishing prediction: 500,000 peaple could die each year people due to AIDS-related illnesses by 2020. (Source: PSD Blog)
  • Another UN report focuses on the rise of food costs in Asia due to the use of crops in biofuels and urges governments to protect the poor by expanding social welfare and health programs.
  • In the last fifteen years, 4,750 rural branches closed down in India. These numbers stand in contrast to claims that rural credit has increased.
  • The Union Cabinet approved the creation of a Farmers’ Debt Relief Fund with an initial corpus of Rs.10,000 crore, which will help small and marginal farmers.
  • According to CNN Money, Deutsche Asset Management, a unit of Deutsche Bank, plans to launch the first private equity fund specialising in climate change investments. The fund will invest in a broad spectrum of assets including green technology, agriculture and infrastructure related to alternative energy.

Microfinance 2.0

Here is an interesting article from Spiegel Online (thanks Avashya for letting us know about it) on an entrepreneur’s efforts to utilize the power of private equity to scale up microfinance institutions more quickly and to provide them with the capital necessary for significant expansion. One issue that comes to mind, as is discussed further in this post, is the ability for such funds to autonomously control the direction of a microfinance fund away from their original core competencies.

In 2001 a pair of Europeans, Jean-Philippe de Schrevel and Cédric Lombard, discovered they shared a mutual conviction that the best way to cure poverty is through the capital markets. So they began lending money to microfinance institutions through a Geneva vehicle called BlueOrchard. Belgian de Schrevel, a former McKinsey & Co. consultant, got his MBA at Wharton, while Lombard hails from one of the families behind Lombard Odier Darier Hentsch, among Switzerland’s oldest private banks.

Despite the success of the $710 million in capital managed through multiple microfinance funds, de Schrevel wanted more control and say in their investment vehicles.

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Private School for the Poor?

From Xigi.net, Gray Matters Capital, a private equity fund that focuses on the creation and expansion of social enterprises has been conducting very interesting research on the prospect of providing private school education at $2 per day in the developing world.

Talked to Sam Moss, Brian Cayce this week about their research at Gray Matters Capital into private schools in the developing world, affordable for people making $2 per day.

Gray Matters likes to be on the cutting edge of the new opportunity, helping to establish infrastructure for the growth of the social capital market. David Kyle, formerly COO of the Acumen Fund is doing on the ground research for them in India. “I was pretty surprised at what we’ve been finding,”Moss said. “There might be a real opportunity that makes sense there,” with the caveat that the research is not all in yet. Steve Hardgrave is taking a hard look from the Gray Matters staff side.

Gray Matters has become such a magnet for people wanting to help them and discounting their professional services to do it, and now people are saying they’d like to invest with them in their next fund because they have such a fine track record of using their money in a smart, strategic way. I’m hoping that we can help them present what they’ve learned and the path to that learnings, the walls they encountered, etc. at our Social Capital Markets event in October in San Francisco.