Aavishkaar Capital launches $250 million ESG First Fund in collaboration with Germany's KfW

Aavishkaar Capital (Aavishkaar) has launched a $250 million ESG First Fund in collaboration with KfW, the German state-owned investment and development bank.

According to the corporation, this fund will focus on boosting mid-cap enterprises' environmental, social, and governance (ESG) practises while also providing them with flexible finance to grow into new markets.

The ESG First Fund will invest in companies in Africa and Asia, capitalising on the worldwide push for sustainability and equality.

The fund will provide capital that can be invested across the capital structure, assisting businesses in improving their ESG standards so that they can capitalise on the growing consumer preference for environmentally conscious, gender-equal, and purpose-driven businesses, as well as meet increasing corporate due diligence demands in the course of regulatory measures in the European market.

The ESG First Fund will concentrate on industries with high exports to Europe.

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

The German government has passed a due diligence law requiring German businesses to consider social and environmental sustainability in their global supply chains. European regulations will be implemented.

“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,” said Wahidi, who is also the head of division 120, which manages sustainability standards policy.

“As we launch this fund, we exhort other development finance institutions looking to enhance ESG impact to join us in delivering significant impact and generate attractive returns whilst bringing about a significant positive change in the lives of the people,” said Vineet Rai, founder and chairman, Aavishkaar Group.

Aavishkaar Capital is the impact investing arm of the Aavishkaar Group, a microfinance, MSME lending, and ecosystem building platform with operations in India, Emerging Asia, and Sub-Saharan Africa. Across its platform, it currently manages more than $1 billion in impact assets.

“We believe in the ability of purpose-driven, responsible capital to be transformative while creating attractive investment returns,” said Jan Martin Witte, director at KFW. “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.”