Impact investing: Purpose-driven Finance finds its Place in India

Vivek Pandit & Toshan Tamhane, September 2017: Click here to read the report.

Impact investing can be a vehicle to fund, catalyse, and scale approaches that improve millions of lives. India is an opportunity-rich environment and is emerging as one of the most attractive markets for impact investing worldwide. High demand for investments is likely to continue as a result of a growing population, underlying economic growth, stable financial markets with a strong rule of law, combined with large unmet social needs.

As impact investing in India has grown to a billion-dollar-a-year industry, investments have been supported by different types of investors, with high expectations of impact, varied expectations of risk and return, and vastly different strategies and portfolio approaches. These investors have persisted despite setbacks, such as those in the microfinance and clean energy sectors.

Four trends that are shaping impact funding in India can be observed:

  1. Diversified and complementary sources of capital

  2. Bigger ticket sizes

  3. Diversifying sector spread

  4. Investment objectives of GPs and LPs aligning

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