The Asian Infrastructure Investment Bank (AIIB) has committed up to US$25 million to Lok Capital Fund IV, a closed-end private equity fund, to support impact-focused investment in India.
This is AIIB’s first purely impact-focused investment in India, expanding the diversification of the bank's portfolio and complementing its partnerships with more traditional private equity funds.
With a target size of up to US$200 million, the fund invests in early and growth-stage companies and has raised about US$100 million in commitments to augment financing for infrastructure and related services across the market.
Specifically, the fund will look at investments that promote development impacts, reduce greenhouse gas emissions, and incorporate gender interventions across the investment process.
The bank’s contribution is capped at 20% of the fund’s total capital commitment with a co-investment sleeve of up to US$5 million.
To enable the fund manager to reach its fund-raising goal, AIIB will play a key role in mobilizing additional capital through its investment and support to scale up various tech-enabled infrastructure business models. The bank says this is in line with its mission to finance Infrastructure for Tomorrow, and its thematic priorities, namely green infrastructure, technology-enabled infrastructure, and private capital mobilization.
“Green and technology-enabled infrastructure in India is at a crucial juncture, and it is essential to mobilize capital towards new, innovative and scalable businesses across the financial services, climate, health, and agriculture sectors and value chains”, says Urjit Patel, AIIB’s vice-president for investment operations (Region 1).
“Through this project, AIIB has the opportunity to work with Lok Capital, one of the most established impact-focused investment managers in the Indian market. This partnership will also contribute to institutionalizing various new initiatives towards impact investing in infrastructure-related sectors.”
Since 2017, AIIB has committed over US$9.9 billion through 43 projects in India, covering the water, energy, urban, transport, and healthcare sectors across the market.