Credit and Finance for MSMEs: Impact investment firm Caspian Impact Investment Adviser (Caspian Equity) has entered into a memorandum of understanding (MoU) with the Assam Rural Infrastructure and Agricultural Society (ARIAS), an autonomous body under the Assam government to launch an investment fund focusing on SMEs in the agribusiness and allied sectors in the state of Assam.
Under the MoU, ARIAS will be “establishing and implementing a contributory and determinate investment trust Assam Agribusiness Investment Fund (AAIF), a statement by Caspian Equity said on Tuesday. Under the determinate trust, the share of beneficiaries is determined during the life of the trust. The fund will have a corpus of Rs 250 crores and will be managed by Caspian Equity.
AAIF will operate as a Category II Alternative Investment Fund registered with the Securities and Exchange Board of India (SEBI) with anchor funding from the World Bank through Assam Agribusiness and Rural Transformation Project (APART). The fund will work towards improving agricultural productivity and employment generation in Assam.
“Caspian plans to work with local incubators and accelerators to identify and develop local SMEs. We will source promising SMEs with references from local financial institutions and agro companies. We will also work with agro institutions intending to open Assam offices,” Caspian Equity told FE Aspire.
The company will pick potential investees by “considering professional promoters and teams with strong credentials along with growth prospects with demonstrated capabilities of sales revenue, focus on unit economics and most importantly openness towards strong governance and independent board.”
The fund will invest in debt, equity and convertible equity. While debt will be for the short to medium term, equity holding in portfolio companies will be for seven to eight years.
Toshiaki Ono, Finance Sector Specialist, World Bank Group, said, “The World Bank is committed to supporting food value chain development in Assam in response to the growing demand for high-value food products. Agribusiness SMEs play a vital role in this transformation but external finance, especially long-term and patient capital for their growth is extremely limited.”
State Project Director for ARIAS Akash Deep said by leveraging collective strengths and through targeted investments, the initiative will enable farmers and rural entrepreneurs of Assam to adopt sustainable agricultural practices and advanced technologies to enhance efficiency and reduce environmental impact.