Promoting financial inclusion in India with Growth Catalyst Partners

Lok Advisory Services, the manager, is an Indian team set up in 2003 by two financial inclusion players: Donald Peck and Rajiv Lall. It is managed by two experienced partners, Venky Natarajan and Vishal Mehta, and has about a dozen members. It has offices in Delhi and Chenai covering the whole of India and is one of the forerunners in investment in financial inclusion and social sectors (health, agribusiness, education).

Growth Catalyst Partners will be the 3rd fund launched by Lok Advisory Services, the successor to LOK I (USD 22m, 2006) and LOK II (USD 64m, 2010) and devoted to India. The fund will make a minimum of 70% of its investments in financial inclusion and a maximum of 30% of its investments in agribusiness and health. With a target size of USD 80m, the fund reached the size of USD 41m at the 1st closing, with investments by CDC, FMO and TIAA, in addition to Proparco’s investment. At the same time, Proparco is cofinancing a EUR 331,000 Technical Assistance Facility with FMO to strengthen the operational capacities, governance and E&S criteria of the companies invested in by the fund.

In 2020, Proparco made an additional USD 5m investment as part of a USD 31m fundraising operation to support the vehicle’s companies in the financial inclusion sector affected by the Covid-19 crisis.

Emergency financing for TA in 2020 will help portfolio companies set up appropriate protective measures for staff during the Covid-19 health crisis.  

The fund’s investments should create or maintain 22,000 jobs over the next five years. 30% of the fund will finance social sectors (education, health) in disadvantaged areas in India (20% of investments will be invested, on a best efforts basis, in the poorest states in the North of the country). The institutional strengthening of the companies invested in will be achieved by a close monitoring of the share of the fund. The Technical Assistance Facility will allow a strategy to be implemented aiming to serve the most disadvantaged populations and a Social Performance Management program to assist the companies invested in with their social mission.