Caspian Debt Gets $20 Mn Investment from US International Development Finance Corp

Caspian Debt on Friday said it has received an investment of USD 20 million (over Rs 150 crore) by US International Development Finance Corporation (DFC) as long-term debt.

"The new facility, which is a combination of subordinated and senior debt will support Caspian Debt in providing customised, collateral-free loans digitally to professionally managed enterprises operating in high impact sectors in India," a statement said.

These sectors include microfinance, SME finance, affordable housing, affordable healthcare, sustainable agribusiness and education, it added.

Caspian Debt primarily works with first-generation social entrepreneurs, who find it difficult to raise working capital as they run new-age businesses with an asset light model, and have no collateral to offer. The statement noted that many of these companies are well capitalised and are growing rapidly but require more responsive lenders.

Caspian Debt said with this facility, it is also committed to contributing 33 per cent of its investments to women-centric businesses and fulfilling its commitment to DFC's 2X Women's Initiative.

2X has catalysed over USD 2 billion of private sector investment in businesses and funds owned by, led by, or providing a product or service that intentionally empowers women in the developing world.

"Caspian Debt has lent over USD 219 million to over 140 early-stage enterprises contributing to 13 Sustainable Development Goals (SDGs) over the last seven years. We are delighted to deepen our relationship with DFC, as our partnership continues to provide much needed firepower to support under-served emerging enterprises and women-centric businesses," Caspian Debt founder and MD S Viswanatha Prasad said.

The funding will focus on promoting disruptive entrepreneurs, who are pushing the envelope for creating sustainable impact, he added. PTI SR

EdTech Startup Varthana Gets $15 Mn Loan from US Govt's Finance Agency USIDFC

An American financial organisation has agreed to sanction USD 15 million loan to an Indian education start-up to expand the access to quality education by providing critical financing to schools that serve low-income students in India.

The financing will help Bengaluru-based Varthana to reach more schools by meeting its need for long-term capital that is unavailable in the Indian market, US International Development Finance Corporation (DFC) said in a statement.

The DFC, America's Development Bank, said that the financing will be especially critical as schools work to adapt to and recover from disruptions caused by the coronavirus pandemic.

In addition to providing timely loans, Varthana has been helping schools implement digital learning tools and teaching methods so that students can continue their education remotely through the pandemic, it said.

Set up by Brajesh Mishra and Steve Hardgrave in 2013, Varthana supports more than 3,500 schools with 84,000 teachers and 2.5 million students, in particularly among low-income populations across the country.

The company utilises a unique cash-flow underwriting model that enables it to flexibly and sustainably provide loans to low-fee schools. The typical Varthana borrower operates a school that charges USD 5 to USD 25 per month in fees.

India's economy has grown rapidly over the last several decades, but more investment in education will be required to keep pace with this growth and extend its benefits across a broader segment of the Indian society, the DFC said.

Low-fee private schools have stepped in to provide low- and middle-income families access to quality, affordable education.

However, these schools need better access to financing in order to grow and improve, it said.

DFC CEO Adam Boehler said this will help low-income students in India access quality education so they can learn, thrive and give back to their communities.

Varthana is a testament to the impact that early-stage ventures can deliver when given the opportunity to scale their innovative approaches, he said.

"As a specialised lender to affordable private schools, Varthana is well positioned to provide both capital and remote education solutions to help schools navigate the current challenges.

"DFC's willingness to provide funding in the midst of this crisis truly demonstrates their commitment to support the education sector when it needs the most, and for that we are very grateful,” said Varthana CEO Hardgrave. PTI LKJ