Aavishkaar Capital, KfW to launch $250m ‘ESG First Fund’

Aavishkaar Capital, an international impact investment manager, and the German government's KfW Development Bank have announced the launch of a $250 million impact investment fund named 'ESG First Fund'.

The fund is focused on strengthening the Environmental, Social, and Governance (ESG) practices of mid-cap businesses in Asia and Africa while offering them flexible capital to scale to new markets.

Bangladesh is expected to be one of the important recipient countries of this investment, according to a statement by Aavishkaar.

The firm has already invested several millions of dollars in a few Bangladeshi companies, including B2B e-commerce platform Sindabad.com Ltd, and fintech firm CloudWell Ltd.

Leveraging on the global drive for sustainability and equality, the ESG First Fund has the mandate of generating superior ESG outcomes and commercially viable financial returns alongside positive social impact, the statement reads.

The ESG First Fund is in general open to all sectors, but focuses on those with high exports towards Europe, of course having a strong ESG commitment.

 "With our investment of 50 million Euros, we want to help set up a fund that demonstrates increased respect for ESG can be a viable investment and business model," said Anosha Wahidi, commissioner for sustainability standards at the German Federal Ministry for Economic Cooperation and Development.

The German government has already passed a due diligence law that obliges German companies to pay attention to social and ecological sustainability in their global supply chains.

"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," Wahidi added.  

Aavishkaar Group's Founder and Chairman Vineet Rai said ESG First fund takes forward the Aavishkaar vision to 'Bridge the Opportunity Gap for the emerging 3 Billion' with its focus on ESG, in Africa Asia region, flexible instruments, gender, and climate change.

KfW Director Dr Jan Martin Witte 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," Witte added.

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'."

The fund would provide businesses with equity and debt as well, he added.

Aavishkaar Capital with its focus on the Global South is a pioneer in taking an entrepreneurship-based approach to scaling businesses for impact.

Aligned to 13 out of the 17 Sustainable Development Goals, Aavishkaar Capital has raised six funds. Currently, it manages over $1 billion in impact investment assets.

Its invested enterprises are impacting over 105 million lives, 65% of whom are women alongside generating 3,00,000 jobs in its preferred sectors such as sustainable agriculture, financial inclusion, essential services in India, emerging Asia and Sub-Saharan Africa.