India’s transition to a low-carbon economy will require massive amounts of capital. Public funds can help set the direction, but private investors, family offices and corporate backers are emerging as critical financiers in the country’s climate and financial inclusion strategies.
ImpactAlpha has tracked more than a dozen LP commitments in India-focused funds over the past year, spanning development finance institutions, domestic institutions and family-backed ventures.
Climate finance
Singapore’s Temasek has earmarked up to $10 billion to invest in India over the next three years, in areas including the green transition, digitalization and healthcare.
The Green Climate Fund backed Avaana, a female-founded and -led investment firm, putting up $24.5 million towards the fund’s $135 million raise. The UK-India Development Cooperation Fund, the Self-Reliant India Fund, the Small Industries Development Bank of India, the Azim Premji Trust and the US International Development Finance Corp. also invested.
Avaana backs early-stage startups in clean energy, electric mobility, sustainable agriculture and biomanufacturing.
Development banks continue channeling capital into climate infrastructure. The Asian Development Bank committed $25 million to a climate bond issued by Impact fund Vivriti Capital. Proceeds will finance solar, wind and waste projects, with at least 30% allocated to EV purchases, charging infrastructure and battery swapping stations.
Chennai-based Northern Arc recently launched its debut climate fund to provide debt financing to India’s agrifood supply. The vehicle is anchored by $50 million from the US International Development Finance Corp. and $15 million from Austria’s OeEB. Earlier this year, Netherlands’ FMO also provided $75 million in debt to Northern Arc to boost green and small business lending
Proparco, the private-sector arm of France’s development agency AFD, made its first VC fund commitment in India with a $5 million investment in Omnivore’s third fund, backing agritech and climate resilience ventures across India and Southeast Asia.
Financial inclusion
Tokyo and Mumbai-based Unleash Capital Partners secured investment for its debut $34 million financial inclusion fund from some three-dozen Japanese LPs. The fund invests in startups in India that are improving the affordability and delivery of financial services.
Japan International Cooperation Agency, or JICA committed $40 million to Aavishkaar Capital’s eighth fund, bringing the vehicle to $95 million of a $220 million target. The fund, anchored by KfW, Germany’s development bank, provides working capital and scaling finance to small and medium enterprises linking local producers to global markets. Aavishkaar’s core investor base includes the International Finance Corp. and British International Investment, along with domestic institutions Bank of India and State Bank of India.
