Lok Capital, an impact investor backed by New York based Rockefeller Foundation, has announced its first close for the third fund. In its third India-focused fund, it has raised around $40.5 million.
France-based Proparco, Netherland’s-based FMO and UK’s CDC Group have invested in this new fund. Along with them, TIAA Global Asset Management has also participated. CDC and Proparco who also participated in this round, are existing investors in Lok Capital.
The VC firm started its fundraising activity last year and is targeting to raise around Rs. 700 crore. It is expecting to reach the target amount by the end of next 12 months. It is also targeting to raise around $15-20 million from domestic investors for the final close.
Lok Capital expects to deploy this fund in next five years. It is targeting investments in the range of $2 million to $10 million. Its targeted sectors include financial services, healthcare and agriculture. In agriculture, it is keen to invest in warehousing, cold storage, contract farming, dairy and organized retail.
It’s first fund was entirely focused on financial inclusion, while its second fund was targeted at healthcare, education and agri-business. This third fund will also see the investor shift its investment strategy from early-stage investing to growth-stage.
Venky Natarajan, managing partner at Lok Capital, says,
Based on the learnings from the second fund, we see that both healthcare and agriculture sectors in the country have a great potential. In healthcare, we are seeing more traction with companies expanding to tier II and tier III towns, which aligns well with our overall investment thesis of being an impact investor.
Lok Capital 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. It has exited from five of the 16 companies in which it invested from its second fund of $62 million.
Four of it’s portfolio companies have received small finance bank (SFB) licenses in 2015. These companies include Equitas Holdings, Suryoday Microfinance, Ujjivan Financial Services and Utkarsh Micro Finance. Equitas and Ujjivan also had a public listing in 2016, which gave a partial exit to Lok Capital.