Impact information
Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.
Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.
What?
| Impact |
|---|
|
|
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How?
| Primary | Secondary |
|---|---|
|
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Who?
| Stakeholder | Geography | Characteristics |
|---|---|---|
| Owners (of micro enterprises) |
India |
Based on existing portfolio analysis, 45% do not have GST registrations and 36% have a CIBIL score of less than 700. Average loan size is INR 4.75 lakhs, and BII’s guarantee is expected to be used for loans of <INR 8.3 lakhs (IFC’s definition of micro-enterprise). Based on Finreach and BII analysis, it is estimated that reach to low-income owners is 32% and reach to low-income employees is >50%. Reach to women-owned MSEs is 25% and Finreach has committed to increasing that to 30%, supporting the 2X qualification. |
| Employees (of micro enterprises) |
How much?
| Scale | Depth/Duration |
|---|---|
|
Our $10m guarantee program through Finreach is expected to enable lenders to guarantee a pool of $20m MSE lending, which is expected to reach c.6K micro enterprises and c.30K employees. |
Depth: In India only 11% of MSEs have access to formal credit particularly as most of them lack proper documentation and security to access to the loan. Finreach’s guarantee support will help improve access to unsecured lending to these micro enterprises. Employees are likely to experience jobs insecurity if the MSE is unable to get access to credit to sustain or grow. There is strong anecdotal evidence of positive impact on employees. Duration: The tenor of the loan that the MSE takes. |
Contribution/additionality
| Contribution/additionality |
|---|
|
Finreach is an early stage company operating in a risky market (MSE lending). Given there is limited to no commercial interest in providing guarantees to Finreach, the company is reaching out to DFIs. |
Risk
Execution RiskGiven the high market, company and instrument risk, Finreach may struggle to find a commercially viable guarantee structure. Evidence RiskGiven the intermediated nature of the investment, it may be hard to assess the ultimate impact. After 2-3 years, Finreach and BII will co-fund an MSE evaluation on Finreach’s portfolio to better understand owner and employee characteristics (incl. low-income) and depth of impact. Alignment RiskRisk that Finreach will i) target less inclusive MSE lenders. This is unlikely to be the case and Finreach’s value proposition to the lenders is in the riskier / more additional segments; in addition, BII’s guarantee can be used only for loans of <INR 8.3 lakhs, and ii) pose customer protection risks. BII will evaluate each MSE lender’s approach to customer protection through the BI screening questionnaire, and will onboard only those that are satisfactory. |
Environmental and social information
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Environmental and social summary
A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.
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Environmental and social risk
A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.
Environmental and social summary
The transaction is classified as low E&S risk. We agreed on an ESAP that will help FinReach integrate the management of E&S risks into existing activities including adhering to BII’s Exclusion List and developing a proportionate E&S policy and procedures and internal E&S capacity in its team.
Environmental and social risk
Low
Reporting and Complaints Mechanism
The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to reportsandcomplaints@bii.co.uk or by mail. See more details on our Reporting and Complaints Mechanism here.
For any other general enquiries contact us at enquiries@bii.co.uk
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Key facts
- First published
:
When the investment was first published on the website database.
- December 2024
- Last updated
:
When the last quarterly update of the website database occurred.
- December 2024
- Project number
:
An identifier number shared by investments in the same project.
- D6058
- Status
:
The current status of the investment (green flag for active and red flag for exited).
- Active
- Region
:
The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.
- South Asia
- Country
:
The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.
- India
- Sector
:
We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.
- Financial services
- Sub sector
:
The sub-sector that the investment is made into; this provides a more granular level of detail than the ‘sector’ information
- Specialized Finance
- Investment type :
- Guarantee
- Start date :
- August 2024
- Amount :
- $9.5m
- Currency of investment :
- INR
- Domicile
:
The company or investment fund’s place of incorporation.
- India
We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.
For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.
For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.
For direct equity investments, this is the date at which British International Investment exited the investment.
For debt investments, this is the date at which the final debt repayment was made.
For funds, this is the date at which the fund was terminated.
For underlying fund investments, this is the date at which the fund manager exited the investment.
The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.
For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.
The currency in which the investment was made.
- 2X Gender Finance
:
Indicates whether the investment is ‘2X qualified’ using the 2X Challenge criteria. You can find out more here. It only applies to investments made from 2018 onwards, when the 2X Challenge was first launched.
- Fully qualified
- 2X qualification criteria:
:
2X Criteria the investment qualifies under. See 2X Criteria for more information.
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- Entrepreneurship — Founder
- Leadership — Board of Directors/Investment Committee
- Leadership — Senior Management
- Indirect/Portfolio
- First published
