2023-09-28 16:35:32
The UK Government’s development finance institution British International Investment (BII) will look to enhance its support for MSME financing in India, its visiting Chief Executive Officer Nick O’Donohoe has said. “MSME financing is an absolutely key focus area for BII in India. The funding gap for small businesses in India is huge. We will continue to focus on funding innovative business models addressing underserved segments in the market”, Donohoe told businessline here.
Asked regarding BII’s venture capital strategy in India, Donohoe said that BII is focused on opportunities with VC funds which have a specific focus on developmental impact. For example, Omnivore, focusses on agrictech related companies. “We are also actively considering investment in a fund which is focussed on plastic waste”, he said.
Ticket size
BII’s typical ticket size in VC investment is between $5-10million. “We would like to keep supporting those GPs until there is significant interest from commercial investors that might step in. Financial inclusion is another key area where we retain a strong interest in identifying further investment opportunities.”, he said.
BII is also looking to invest regarding $1 billion in Indian climate-related projects by 2026. This DFI is evaluating businesses in bio-fuels, circular economy, etc, as part of the agreed 2030 roadmap between the two countries.
Green bonds
Asked regarding green bonds, Donohoe said that BII will typically not invest in government-issued bonds. “But we would evaluate opportunities presented by the private sector where there is a strong mobilisation story.
That means BII would need to have an active role to play in forming the consortium and setting mutually acceptable terms for all lenders. Such green bonds can come from nascent areas such as like round-the-clock power supply, EV ecosystems, green hydrogen and so on.”
BII had last year invested over $300 million in climate finance in sectors such as renewable energy, sustainable agriculture and electric mobility.
Its current portfolio in India is regarding $2.2 billion with investment in over 290 businesses. Last year, BII invested up to $250 million in automaker Mahindra and Mahindra Ltd’s new electric vehicle unit.
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