Sustainability for MSMEs: The government-backed fund for sustainability-focused SMEs, Neev Fund II is expected to meet its final fundraising target of around Rs 2,000 crore by June, reported Mint citing a senior executive.
“We are targeting between Rs 1,750 and Rs 2,000 crore to be closed in the next six months…through June. That’s where we will likely end Neev II. We started deploying from that and have deployed about a quarter of the fund already,” Akshay Panth, Chief Investment Officer,Neev Funds told Mint in an interview.
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Neev II was launched in May 2021 to provide growth capital to SMEs offering sustainable solutions especially in areas of climate action, sustainability and social impact enterprises. Till date, it has raised around Rs 1,000 crore of the overall Rs 2,000 crore from investors such as European Investment Bank (EIB), Japan’s International Cooperation Agency (JICA), Foreign, Commonwealth and Development Office (FCDO), Small Industries Development Bank of India
Currently, Neev II fund, managed by SBI
“We have a very strong pipeline of around $300 million across 20 firms over a five-year period which we are sifting through to figure out what and where we to invest…in strategies of climate adaptation and climate mitigation. Those are the two buckets,” Panth told Mint.
The fund has invested in four startups until now – cleantech company GPS Renewables, emission-control device manufacturing company Chakr Innovation, environment solution company Blue Planet, and its latest investment was in green hydrogen company Hygenco Green Energies.
For Neev II, the ticket size per transaction has been raised to Rs 100 – 125 crore whereas it was Rs 40-45 crore in the first Neev fund.
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“Decarbonization of supply chains, energy efficiency, green hydrogen, and anything which has a positive climate action angle to it is what we would be investing in. Those are the sectors that we will be looking at,” the report added, citing Panth.
The first fund Neev I, launched in 2015, invested Rs 524 crore in 10 companies out of which it has exited SunSource Energy with an internal rate of return (IRR) of around 18 per cent. While the target IRR from Neev I is 12 per cent, Panth expects returns to be in mid-late teens by the end of the fund term.