India-focussed impact investment firm Lok Capital has reached first close of Lok Fund III at $40.5 million. Fund III has a total target corpus of around $100 million and is expected to close in the next 12-18 months. The fund will be deployed in the next five years and will focus on growth stage investments in financial services, healthcare, agriculture and livelihood.

Fund III, along with Lok Capital’s Fund I and Fund II will bring the total capital under-management to over $125 million. The first two funds Lok Capital LLC and Sarva Capital LLC are fully invested.

The funds have received investments from marquee investors. Existing LPs – CDC Group Plc, the development finance institution of the UK, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.’s (FMO) and Société de Promotion et de Participation pour la Coopération Economique  (Proparco) also participated in this funding round. TIAA Global Asset Management has come come in as a new investor.

“Aided with the government initiatives from the last few years along with very progressive regulatory environment, the climate is ripe in India for deepening financial inclusion through both traditional business models as well as through fin-tech models. By committing to the 3rd fund, our investors have placed trust in the founding team, which has stayed together for the last 10 years and on our ability to stay disciplined while investing and managing investments,” said Venky Natarajan, Managing Partner, Lok Capital.

Earlier this year, Lok had invested in Pune-based Siddhivinayak (SV) Agri Processing, an end-to-end potato supply chain management company, marking its first investment in the agriculture sector. Fund III is expected to back more enterprises in the agri and dairy space.

The firm claims that it has fully returned the committed capital of $22 million from its first fund with an internal rate of return of 15% in dollar terms. The second fund is currently tracking gross returns of 28% in dollar terms, with portfolio companies Equitas and Ujjivan going public. Some of its good exits include Satin Creditcare, Janalakshmi Microfinance and RuralShores.

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