“Aavishkaar Goodwell India Microfinance Development Company” (“AGIMDC”) is a microfinance development company that invests in entrepreneurial microfinance organizations in India. AGIMDC was incorporated as a Global Business License 1 Company with Financial Services Commission, Mauritius in December 2006. The fund achieved its final closing in the month of May 2008 at USD 18.3 mn. The tenure of the fund is 10 years. AGIMDC partners in the growth of Microfinance institutions by equity infusion. The fund has received subscriptions from international institutions such as IFC, Goodwell MDC, Blue Orchard etc. Aavishkaar Goodwell provides equity capital and active support to microfinance start-ups and microfinance institutions that are in the transformation or growth stage. The objective of Aavishkaar Goodwell is to maximize value through superior risk-adjusted social and financial returns, by focussing on scalability, efficiency and leverage, and by applying a rigorous private equity approach within a mission-driven setting.
Aavishkaar Goodwell invests in small scale MFI start-ups, and in medium to large scale MFIs (transformation or growth phase) that operate either as non-banking finance companies (NBFCs) or as organizations having specific relevant financial services licenses. Till date AGIMDC has made 5 investments in large scale and growth phase start up MFIs.
The strategy for small scale MFI start-ups is to combine a tried and tested service company- model, that operates with the help of loans from larger banking institutions (these loans are serviced by MFIs from the interest generated by lending money to people at the ‘Bottom of Pyramid’) with an innovative franchising approach. The franchising approach enables Aavishkaar Goodwell’s investment team to simultaneously manage and groom a significant number of startup MFIs within a short span of time, resulting in faster returns from investments with comparatively lower costs. Aavishkaar Goodwell capitalizes on this business opportunity, first by using the model to create an innovative and cost-effective start-up vehicle for pro-poor banks, and secondly, using its partnership in defining exits.
The strategy for medium to large scale MFIs (the NBFCs) is to provide risk capital to fund further growth while forming a strong basis for financial leveraging, and to build value as an active equity stakeholder in the underlying businesses. Aavishkaar Goodwell invests with the objective to hold the investments for the long term, averaging between 5 and 7 years. The fund will be an active shareholder, highly engaged and involved in matters of financial management, governance matters, planning and managing growth, technology and innovation. Till date, Aavishkaar Goodwell has made investments in three MFIs.
Aavishkaar Goodwell’s value-building strategy is based on leveraging the expertise and resources in these networks, by forming alliances with leading microfinance capacity building organisations, MFIs, NGOs, banks and other funders. For instance, the franchising approach for startups has been developed and implemented by Intellecap in partnerships with ICICI, CGAP and local MFIs.