Even though the economic condition of India has been buoyant, a strong disparity exists between urban and rural sectors of India but now it seems that this picture may also change before long. Reason? Lots of recent reports do state that the rural India is thriving owing to capitalists (VCs) and private equity (PE) funds. These two happen to be its current and potent allies and distancing from elegant sectors like IT and real estate, portfolio funds are making a precise route to make an investment in social projects for the economically backward.
It has also come to the knowledge that micro-credit firms and microfinance companies, remain engaged with investing in social projects involving rural poor, are perceiving large capital inflows from strategic investors.
In accordance with microfinance industry estimates, the segment including micro-equity investments, has already received in excess of Rs 3,000 crore of PEVC funds in the past three years. On the other hand, influxes into microfinance schemes and other social projects have resulted in lending poignant $15 billion in 2008. As per PE tracker Venture Intelligence rolls, PE firms have invested about Rs 200 crore in 2009, 21% lower than the same period last year.
Commenting on this, Paul Thomas, Managing Director, ESAF Microfinance stated that the trend of mainstream PE funds investing in microfinance projects started three years ago and sustainability of the model and returns profile are some of the factors that mainstream PEVC funds think about while committing investments. ESAF Microfinance happens to be the Indian investment arm of Opportunity International Australia and did raise Rs 12 crore from pro-social fund Dia Vikas in recent times.
Many analysts have also opined that PEVC is thoroughly engaged in the task of screwing up in social sectors, for the reason that it entails employment funding instead of lifestyle funding.
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