Project detail - Lok Capital V

Who is our prospective customer?

Lok Capital V ("Lok V", the “Fund”) is the fifth fund managed by Lok Capital (“Lok”), a long-standing FMO partner focused on (early) growth-stage investments in India. The Fund will invest in 10–12 companies across financial institutions and climate & sustainability. Financial services will represent the majority of the portfolio and includes businesses that expand access to financial services through lending, climate finance, non-credit financial services and fintech. Climate & sustainability-focused investments will target companies operating in areas such as sustainable agriculture, conscious consumption and sustainable business solutions. By providing growth capital and strategic support, Lok V seeks to promote financial inclusion, climate resilience and sustainable economic development in India.

What is our funding objective?

FMO intends to commit to Lok V at first close to support its fundraising and help close a financing gap towards the Fund's target fund size. The Fund seeks to generate positive financial returns and positive impact from making investments in (early) growth stage investments in private companies in the above-mentioned sectors in India.

Why do we want to fund this investment?

Lok V targets investments in several focus sectors and impact themes - including financial inclusion, gender, and climate action - for FMO. The investment will allow FMO to keep supporting a trusted local partner with an explicit impact focus in one of its core markets. Given that the Fund is expected to qualify for the 2X Challenge, FMO’s investment aims to support activities that contribute to Gender Lens Investing and Inclusive Growth, thereby contributing to SDG 5 (Gender Equality) and SDG 10 (Reduced Inequalities).

What is the Environmental and Social categorization rationale?

The Fund is categorized as E&S Category B in accordance with FMO’s Sustainability Policy. Lok V’s investment strategy is expected to have a large allocation to the Financial Institutions along with limited exposure to climate mitigation, adaptation-oriented manufacturing or agri-supply chain companies. Thus, overall environmental and social (E&S) risk exposure is expected to be medium to low (Cat. B and C) and limited to IFC PS 1-4 risks, key amongst these being overall E&S risk management, stakeholder engagement, labour and working conditions, resource efficiency and pollution prevention and contextual risks. IFC PSs 5-8 are less likely to be triggered, as the Fund will focus on asset-light tech-enabled business models and not in companies with extensive physical infrastructure. Due to the long-standing relationships with DFIs, Lok has developed a robust Environmental and Social Management System (ESMS) in line with local legislation and IFC PSs, which is integrated across its investment lifecycle. FMO, with other DFIs, will continue to monitor and support the enhancement of Lok’s E&S systems and capabilities to ensure effective management of portfolio E&S risks and impacts and to identify opportunities for value creation.