Here are some frequently asked questions on Caspian Impact Investments (CII), if you can’t find the answer here, please feel free to contact us at http://www.caspian.in/contact-us.html.
What is Caspian Impact Investments?
Caspian Impact Investments (“CII”), is an Indian multi-sector social impact debt provider that invests in institutions across sectors with a view to enable positive development impact. Currently, CII focuses on four sectors: Food & Agriculture, Microfinance, Small Business Finance and Affordable Housing (Finance & Developer). You can learn more about CII, here: http://cii.caspian.in/
CII is the third fund managed by Caspian Impact Investment Adviser Private Limited (“Caspian”). Caspian manages two other funds “Bellwether Microfinance Equity Fund” and “India Financial Inclusion Fund”. For more details on Caspian, please visit: http://www.caspian.in/
Why CII?
CII recognises that one of the key challenges that all early and growth stage businesses face is the lack of access to appropriate finance based on the needs of the business. CII was set up with the mandate to address that gap for specific sectors.
Our team has combined experience of 60 years in making successful debt and equity investments in early and growth stage businesses. CII was set up to leverage this experience to provide debt to high quality organisations across the focus sectors mentioned above.
In order to ensure that all investment decisions are backed by sound understanding of the underlying business, CII also leverages the understanding of a network of experienced practitioners, advisors and specialised partner organisations. All clients of CII client benefit directly or indirectly from the experience and the networks that we have.
We focus on the unique needs of each high quality business and provide a largely customised solution that is structured to help the business grow. Unlike a broker or service facilitator, we invest our own funds in the businesses and hence our success is measured by the success of the businesses we lend to.
What kinds of businesses does CII support?
CII supports growing India based for-profit businesses across a range of sectors which currently include financial institutions (microfinance, small business finance, affordable housing finance and financial inclusion enablers), affordable housing developers and food & agribusiness institutions.
We consider the following legal entities;
- Private and Public Limited companies
- Co-operatives and Producers’ Companies
Given that the minimum ticket size of the loan that CII makes is INR 10 Million, the business has to have appropriate turnover (typically more than INR 50 Million) to justify a loan from CII.
Which kinds of business or sectors does CII NOT support?
CII does not invest in not-for-profit organisations (NGO’s) (Note: CII can support non-profits only in the microfinance sector) or proof-of-concept or R&D programs. We also do not support any businesses which do not comply with applicable environmental, legal and social requirements as detailed in our ESG (environmental, social and governance policy).
What are CII’s main criteria for investment?
CII supports businesses that have a proven ability to generate enough cash flow to service all debt obligations while being financially sustainable for all its stakeholders. We look for ethically sound entrepreneurs or business owners who are committed to the business and have the relevant skills, experience and/or track record to run their business.
We look for businesses that have a well-defined governance structure and a clear intent to track and deliver social returns in addition to the financial returns.
We prefer companies that have external investors and a strong Board. In case of Producer Owned Organisations, a strong track record and/or a strong promoting organisation is preferred in addition to a strong professional management.
What type of finance does CII provide?
CII provides debt and structures the loans based on the unique needs of the business.
The loan funds can be used to:
- Grow the business or a new product line
- Invest in assets related to the business
How much financing will CII provide and for how long?
CII will make a loan between INR 10 million to INR 70 million.
CII designs a suitable loan structure and repayment structure which is based on the unique needs of the business. Typically we invest in a business for a tenor of 1 to 3 years. In some cases, we may decide to take a five year exposure.
How to apply for finance?
To apply for finance please visit http://cii.caspian.in/apply-loan.html
Will CII ask for collateral?
Collateral will always be considered in any lending process and not just in CII’s case.
CII is modelled to be a specialised lender for early and growth SMEs and our experience allows us to identify and manage risks associated with investing in such businesses. Our decision to lend is based primarily on the ability of the business to generate cash flows and the quality of the promoters. Collateral is an important but a secondary consideration.
It is important to note that if an applicant has little or no collateral but has the required expertise or experience and we are comfortable with the reasons why the applicant can offer no collateral, CII will still consider investing in such a business as it has done so many times in the past.
We make an assessment of the collateral availability in the following two ways. Firstly, if someone has been in business or working for many years and has not build up assets we would want to understand why this is the case. Lack of assets may be an indication of weak business track record.
Secondly it is also a strong indicator of commitment. If someone has collateral and is not prepared to pledge this collateral we may be hesitant to invest as this suggests that the entrepreneur or business owner/s don’t believe in their own business plan and its chances of success.
In summary, CII is prepared to invest in a business even if it does not have collateral as long as the quality of the entrepreneur and the viability of the business is not in question. CII will never invest in a business where viability of the business is not evident even if there is adequate collateral available.
Does CII invest in equity?
No. CII is a debt fund managed by Caspian. Caspian does manage other funds that invest in equity but the criteria and focus sector vary depending upon the fund. For further details on Caspian, please visit: http://www.caspian.in/
If you have further queries, please feel free to contact us at http://www.caspian.in/contact-us.html.
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