Aavishkaar Capital, KfW launch $250 million ESG First Fund

Aavishkaar Capital, in partnership with German state-owned investment and development bank KfW, on Tuesday announced the launch of a USD 250 million ESG First Fund.

The fund will focus on strengthening the Environmental, Social and Governance (ESG) practices of mid-cap businesses while offering them flexible capital to scale to new markets, Aavishkaar Capital said in a statement.

Leveraging on the global drive for sustainability and equality, the fund focuses on investing in Africa and Asia with the mandate of generating superior ESG outcomes and commercially viable financial returns alongside positive social impact.

The fund will seek to provide transformational capital which can be invested across the capital structure, helping businesses improve their ESG standards so that they can capitalise on the increasing consumer preference for ecologically-conscious, gender-equal and purpose-driven businesses.

It will also enable them to meet increasing demands on corporate due diligence in the course of regulatory measures in the European market.

The fund is in general open to all sectors but focuses on those with high exports towards Europe.

"With our investment of 50 million euros, we want to help set up a fund that demonstrates that increased respect for ESG can be a viable investment and business model," Anosha Wahidi said on behalf of BMZ, Federal Ministry for Economic Cooperation and Development, Germany.

According to Wahidi, the German government has passed a due diligence law that obliges German companies to pay attention to social and ecological sustainability in their global supply chains. Corresponding European regulation will follow

"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. The fund is therefore primarily intended to help SMEs in Africa and Asia to meet the growing demands from European companies," Wahidi added.

Aavishkaar Group founder and Chairman Vineet Rai said the ESG First fund underscores the unique partnership that Aavishkaar Group has built with KfW Group to develop rapidly innovative products and launch them quickly with trust and long term impact as the bedrock of this partnership.

"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," Jan Martin Witte, Director, KfW said.

Aavishkaar Capital is the impact investing arm of the Aavishkaar Group, which currently manages over USD 1 billion in impact assets across its platform.