The European Investment Bank and the country’s largest lender SBI on Friday entered into a pact to jointly pump Euro 100 million in equity financing into Indian small businesses focused on climate change and sustainability. An agreement got signed on the margins of the European Union-India leaders meeting in Portugal, where both the financial institutions agreed to back the initiative, as per a statement.
SBI already invests in a vehicle called Neev Funds for its impact investing objectives, and the two entities have created ‘Neev Fund II’ for taking ahead this partnership. This is one of the EIB’s first private equity investments in India. Neev Fund II will provide equity to SMEs focusing on mitigating climate risks, promoting social development, job creation, and gender equality at scale, SBI chairman Dinesh Khara said.
He added that the cooperation with EIB, one of the world’s largest providers of climate finance, will further strengthen and deepen the bond between India and the European Union. The EIB and SBI will together support the new Neev Fund II investment fund that will unlock climate action and sustainability investment by businesses across India through new equity financing. Under the management of SBICap Ventures, an SBI group company, Neev Fund II will invest up to Euro 100 million in Indian small and medium-sized enterprises (SMEs) and provide growth and expansion capital to companies offering solutions for clean energy, electric vehicles, efficient use of raw materials, and water and circular economy projects in the country, the statement said.
The fund will enable Indian innovative and emerging companies to fund their growth through equity or quasi-equity instruments, it added. Innovative solutions often require innovative forms of financing, such as private equity funds. Our partnership with the State Bank of India will create a much-needed source of equity financing for climate action and environmental sustainability solutions offered by innovative SMEs, EIB’s head of operations in India, Christian Kettel Thomsen, said.
SBI Ventures’ managing director and chief executive Suresh Kozhikote said the Neev Fund generates commercially attractive returns while making a significant positive contribution to society. Neev Fund II will provide equity and quasi-equity to SMEs (Small and medium-sized enterprises), targeting sectors that support the achievement of the UN Sustainable Development Goals (SDGs), particularly aiming to limit climate change through energy, agricultural, water, and waste management technologies.
This could include businesses offering solutions for the development of new technology for climate change, environmental protection, electric vehicles, and any other innovative products and services that could benefit climate action across the world, the statement said.