Ummeed Housing Finance Raises $5.6M in Series B Funding Led by Lok Capital

Delhi-based affordable housing finance company, Ummeed Housing Finance today announced that it has raised Series B funding of $5.6 million from existing investors Lok Capital Growth Fund (Lok’s third fund) and Duane Park.

This is close on the heels of the first institutional funding of $3.5 million raised from Lok and Duane Park in October, 2016. The fresh round of investment will fuel the company’s expansion plans to new locations in North and Central India, lead to investments in SMAC (Social, Mobile, Analytics and Cloud) technologies and grow assets under management by six times in the next year.

Founded in January 2016 by Ashutosh Sharma, who spent 25 years at Citi, HSBC and Bank of Montreal, Ummeed focuses on providing housing finance access to families with low and informal income. Over the last 8 months, Ummeed has grown exponentially with three branches in Delhi, Chandigarh and Jaipur and has close to Rs. 20 crores assets under management (AUM). The company has also fared above industry standards on critical parameters like credit quality, yields, branch and per employee productivity metrics. In the next one year, Ummeed aims to expand to six new locations across North and Central India, and build AUM of Rs. 120 crore by March 2018.

Ummeed has already invested in building a technology platform for loan origination and loan management. In the next phase of technology deployment, Ummeed aims to harness the power of SMAC - social media, mobility, analytics and cloud commuting. It targets to go paperless, deploying tablets in all of its branches that can study the customers, run algorithms for credit scoring and disburse loans at a faster pace.

Talking about the latest fund raise, Ashutosh Sharma, Founder, Ummeed says, “The fresh round of investment comes at a time when Ummeed is ready for scale. We will strengthen our Fintech and move towards becoming a mobile platform. We aim to build scoring modules that can improve operation efficiencies, reduce turnaround time & build robustness around the credit quality of the portfolio. We would like to thank Lok and Duane Park for their continued support as we gear up for our next stage of growth.”

According to a Monitor-Deloitte study commissioned by World Bank and the National Housing Bank, the potential of the Indian affordable housing finance segment is currently pegged at Rs 8.8 trillion (~$135 bn). Topped with this, the Govt of India’s policies like Pradhan Mantri Awas Yojna, promoting affordable housing, is expected to provide further impetus to the segment. This conducive environment gives immense opportunity for a company like Ummeed to lend to the informal market and gain significant market share.

Affordable housing finance is a crucial component of the financial inclusion thesis at Lok as it creates a stable and long-lasting asset for a family, apart from significantly improving their standard of living. Since its inception in 2004, Lok has built an enviable track record of investments in diverse business models in financial inclusion. This includes small finance banks, affordable housing finance and MSME finance.

Announcing the follow-on investment, Vishal Mehta, Co-Founder, Lok Capital said, “Both the approach to building the business and the proof points on the ground have reinforced our faith in the Ummeed team. We believe Ummeed will become a significant player in the affordable housing space in a short span of time, given the large market size, the founding team’s focused approach, strong underwriting capabilities and the vision to leverage technology. We are excited about the growth prospects of the company and are happy to further our commitment in Ummeed.”

Ummeed is backed by a team of ex Citi Bank professionals, who have solid foothold in commercial banking, credit and mortgage. Sachin Grover, the Chief Operating Officer, has over 20 years of mortgage experience at Citi Financials, IIFL and Magma Housing.The operating team of Ummeed consists of professionals with extensive small-ticket mortgage experience at companies like AU Housing, Magma and Shubham. Mr. Bikash Sharma has come on board as Financial Controller with 9 years of experience in fund raising, financial modelling, Treasury and finance functions. He has previously worked in Manappuram Finance and Encore Capital Group.

Diabetes Care Provider Dr Mohan's Raises Rs 66 Cr in Series A Funding for Expansion

India’s largest exclusive diabetes care provider, Dr. Mohan’s Diabetes Specialities Centre today announced that it has raised Series A investment of $10.23 million (Rs. 66 crores) led by Lok Capital advised Growth Fund – the third fund from Lok. This is the first round of institutional funding for Dr. Mohan’s, since its inception in 1991.Dr. Mohan’s will use the funds to scale rapidly; develop a pan-India presence and grow from a base of 25 clinics to 100 in the next 4 years. This round of funding also counts Evolvence India Fund as co-investor. Venky Natarajan, Managing Partner, Lok Capital and Ajit Kumar, Managing Director, Evolvence India Fund will join the board of Dr. Mohan’s. Veda Corporate Advisors ("Veda") was the exclusive financial advisor to Dr. Mohan’s for this transaction.

Founded by internationally renowned Diabetologist, Dr. V. Mohan and his late wife Dr. Rema Mohan, Dr. Mohan’s is one of the earliest organised players in the diabetes care market in India. Dr. Mohan, personally, has been at the forefront of diabetes care in the country and has built a robust delivery model for diabetes care and an asset-light business model that has so far scaled to 25 centres (2 hospitals, 22 clinics) across seven states of India. Dr. Mohan’s has used a very effective hub and spoke model to deliver comprehensive diabetes care to patients in both urban and underserved rural areas of Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Orissa, Puducherry and Delhi. The team of specialists at Dr. Mohan’s have treated over 400,000 patients thus far.

Talking about the firm’s first institutional fund raise, Dr.V. Mohan said, “Our aim is to bring the best of diabetes care to centres across India; particularly to states and districts where specialized diabetes services are not available currently. The series A funding will help us accelerate expansion plans and triple our footprint in India in the next 4 – 5 years. We are delighted to have Lok Capital and Evolvence on board, whose significant knowhow and track record in healthcare will strengthen our hands and contribute to our goal of quality diabetes care for all Indians.”

According to Deloitte Touche Tohmatsu, the Indian healthcare industry is expected to reach USD 280 billion by 2020. Single specialty healthcare facilities have been a dominant theme in the Indian healthcare landscape in recent years. The International Diabetes Federation (IDF), estimates that India will become the diabetes capital of the world; number of diabetes cases is expected to be over 100 million by 2030, from about 70 million today and the market for diabetes care is currently estimated to be a whopping Rs. 12,000 crore.

Diabetes incidence is no longer an urban phenomenon, with increasing cases of diabetes in rural areas as well as amongst urban lower-income communities. A study done by the Director General of Health Services (DGHS) shows that one out of every four persons living in the urban slums of Chennai suffer from diabetes — which is three times higher than the national average of about 7%. The slums of Bangalore and Ahmedabad also recorded higher than average rates of 14.77% and 13.37% respectively. Diabetes also imposes a more than proportionate cost at the bottom of the pyramid; it is estimated that for a low-income Indian family with an adult with diabetes, as much as 25% of family income may be devoted to diabetes care.

Affordable healthcare is an important part of Lok’s investment thesis. The cornerstones of the thesis being: creating access to underserved markets, proven expertise in delivery of high quality clinical services and delivering care at affordable price points.

Announcing the latest investment, Venky Natarajan, Managing Partner, Lok Advisory Services, said “The diabetes care market is still largely addressed by single doctor set-ups. There is a huge whitespace for an organised care provider to build a pan-India chain offering holistic care for diabetes. The team at Dr. Mohan’s comes with very high pedigree, have pioneered diabetes care in India and are world renowned for their quality of research in the field of diabetes. The team has also built a scalable and asset light model that can now be rapidly deployed across India. Dr. Mohan’s is a unique asset today in the Indian healthcare landscape and has every chance to remain so.”

Speaking about the investment, Ajit Kumar, MD, Evolvence India Fund said, “We are very pleased to partner with Dr Mohan's Diabetes Specialities Centre. Diabetes is a growing epidemic in India and one that affects millions every year. We believe Dr Mohan and the family has been at the forefront of diabetes care and research in India and have built an excellent network of state of the art centres to provide diabetes treatment and are now poised to further expand across India.”

One in six people with diabetes in the world is from India. There are estimated 72.96 million cases of diabetes in adult population of India. The prevalence in urban areas ranges between 10.9% and 14.2% and prevalence in rural India was 3.0-7.8% among population aged 20 years and above with a much higher prevalence among individuals aged over 50 years (INDIAB Study).

Patients in India are treated by injectable drugs belonging to the same GLP-1 class of medication such as dulaglutide, sold by US drug maker Eli Lilly, and liraglutide sold by Novo Nordisk. But semaglutide isn’t available in the country yet. Semaglutide is sold under the brand names Ozempic and Rybelsus, and is an anti-diabetic medication used for the treatment of type 2 diabetes. Semaglutide acts like human glucagon-like peptide-1 so that it increases insulin secretion, thereby increasing sugar metabolism. The cost for Ozempic is expensive for Indian population as its subcutaneous solution (2 mg/1.5 mL) is around $856 for a supply of 1.5 milliliters, depending on the pharmacy you visit.

Dairy Brand Osam Raises $6.7M in Series B Funding Led by Lok Capital and Aavishkaar

Ranchi-based HR Food Processing Private Limited (HR Food), which manufactures and markets dairy products under the brand ‘Osam’ has raised Rs 45 crores ($6.7mn) in Series B funding. This round of funding was led by Lok Capital advised Growth Catalyst Partners (GCP) – the third fund from the India focused VC firm along with co-investment from existing investor, Aavishkaar India II Company Ltd. The funds will be utilised by the company to expand its production capacity and further its distribution outreach into neighbouring districts in Jharkhand and Bihar.

Following the commercial launch in 2015, Osam has established itself as a leading private dairy brand in Jharkhand, with a procurement network reaching more than 10,000 dairy farmers, processing around 40,000 litres per day and selling products through a network of 3,000 plus retailers across Jharkhand. Leveraging this fundraise, HR Food has already acquired another dairy plant in Jharkhand and is looking at other acquisitions to capture a significant share of Eastern India’s dairy market.

India is the largest consumer of dairy products and the consumption of milk alone constitutes to 400 million litres per day. The dairy market is expected to grow at 16% CAGR and reach $155 bn by FY 2020. However, the per capita consumption of dairy in East India is almost 50% lower than the national average, indicating huge potential for companies like HR Food to create strong consumer brands and build large dairy businesses.

Founded by Abhinav Shah, Rakesh Sharma, Abhishek Raj and Harsh Thakkar, HR Food identified a large demand-supply gap in the states of Bihar and Jharkhand that have low penetration of organized dairy players and focused on building a seamless dairy supply chain in these underserved areas. The company positively impacts the livelihoods of dairy farmers by training and enabling them with modern practices in dairy farming, procurement of livestock, design of farms, milk procurement, processing, packaging and delivery. HR Food’s integrated model, procures milk directly from farmers in Bihar, processes it at its facility in Jharkhand and sells its products like milk, curd, lassi, and paneer to retailers.

Talking about the latest round of funding, Abhinav Shah, Co-founder and CEO of HR Food, said, “We are very excited to partner with Lok Capital for this critical fundraise and thankful for Aavishkaar’s ongoing support, which has been indispensable in building the Osam story. With this round of fundraise, Osam is well poised to deepen its outreach into key target markets in East India, with an expanded production capacity enabling our growth, and emerge as the leading dairy brand in Eastern India.”

Agri-diary is one of the important investment themes for Lok’s third fund as it offers good growth potential and the right blend of socio-economic impact and brand creation. The fund will support businesses that create value for small and marginal farmers along with generating good commercial returns. Lok believes that there is tremendous scope for agri-dairy enterprises to innovate, scale-up and address the challenges faced by the Indian agri and dairy sectors.The funding in Osam marks Lok’s first investment in dairy and second investment in the agri-diary space, following earlier investment in a Pune-based company, SV Agri Processing from its fund II – Sarva Capital.

Announcing the latest investment, Rajesh Babu, Director, Lok, said, “Given the large opportunity present in the dairy industry and the significant scope for high-quality private sector players to operate in the space, Lok is keen on backing integrated business models that make dairy and agriculture more sustainable for farmers. Osam is transforming the dairy sector in Jharkhand and Bihar through high quality customer offerings and improving farmer livelihoods by providing transparency on price, quantity and quality to over 10,000 farmers.”

Ajay Maniar, Partner, Aavishkaar said “We are extremely encouraged by the growth and build-out of Osam. We have invested in the company since the ideation stage and are delighted by the company’s progress and the validation of our investment thesis. We look forward to the founding team to continue and build on the momentum as they establish Osam as the dominant player in Jharkhand and Eastern India.

Unitus Capital was the exclusive investment banking advisor. Richa Natarajan, Vice President, Unitus Capital (UC) said, “Dairy has always been a critical part of UC’s mission given its potential to transform the lives of millions of farmers. We are very proud to have played a role in Osam’s successful fund raise and look forward to helping them scale over the coming years!”

Lok Capital Announces First Close of Third Fund at $40.5M

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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VCs To Invest Fresh $2 Billion In Indian Startups

Venture capital investors India has plans to raise fresh $2 billion (about Rs12,400 crore) new funds for booming Indian startups.

Top VC investors such as Accel Partners, Kalaari Capital and SAIF Partners - who recently scored rich returns on consumer Internet ventures such as Flipkart and fund-raising momentum that continues from 2014 when venture funds raised over $1 billion for Indian startups.

Accel Partners, which manages $230 million in India-focused capital, plans to raise $250-275 million for its fourth India fund. In the new fund, the investment outlay for each company may go up to $10 million against $5-6 million now.

Bangalore-based early stage investor, Kalaari Capital, plans to raise $200-250 million.

Delhi-headquartered SAIF Partners, which invests in early and growth stage companies, plans a $300-350 million second India fund.

Mumbai-based Blume Ventures, which targets pre-revenue stage startups, is on the road to raise $60 million, while India Quotient is raising $24.3 million and KAE Capital is in the market for a $50-60 million fund.

IvyCap Ventures is raising a $150-million second fund and plans a $40-million initial close in June.

Related - 13 Govt. Venture Capital Firms for Startups In India

Mumbai-based Aavishkaar, which pioneered social sector investing in India, is raising $400 million across two separate funds, one of which will invest in overseas startups.

Delhi-based Lok Capital is raising a $100-million third fund, of which $45 million is expected by June.

Elevar Equity is raising a $125-million fund, dubbed Elevar Equity III, and has already received commitments worth $34 million from investors.

India is in the middle of an unprecedented startup boom with more than 1,200 new ventures coming up across the country in 2014. The success of online retailers such as Flipkart and Snapdeal, along with rapid growth in internet usage and mobile and online shopping, has made the Indian startup space a preferred one for investors across the world.

Overall investments in Indian startups hit an all time high of $2.1 billion in 2014, nearly 50% more than the previous year, and the momentum is expected to continue this year, both in seed and mature companies.