Chief Investment Officer
Neev Fund
Akshay is the Chief Investment Officer at Neev Funds and works closely across matters of policy, diversifying investor base and generating value for portfolio companies. He represents Neev Funds on the board's portfolio companies such as Punjab Renewable Energy Systems Pvt Ltd, Leap India Food & Logistics, United Sustainable Energy, Blue Planet Environmental Services, GPS Renewables and Chakr Innovation.
During his career, Akshay has invested over USD 200 million across sectors such as green energy, infrastructure, healthcare, logistics, education, and circular economy in the MSME space. He holds a Master of Business Administration degree from IIM Lucknow.
A unique partnership between the Government of India and the Government of UK, Neev Fund is one of the pioneering impact funds catalyzing private investment and inclusive sustainable growth in India. Could you please shed some light on the larger investment strategy and structure of the organization?
Neev Funds includes Neev I and Neev II. Neev I, now fully deployed, is a climate and social impact fund with a focus on low-income states in India. The Neev I Fund has a corpus of ~INR 5250 Mn and is fully deployed across 10 portfolio companies. We are currently investing out of Neev II, where the strategy is focused on making equity investments in SME businesses in climate action, environment and sustainability. Under the Neev II Fund, we look at sectors such as waste management, water supply & sanitation, clean tech, energy efficiency, renewable energy, sustainable agriculture, urban mobility, etc. that mitigate the impact of climate change and promote a clean environment. The Fund seeks to invest across sectors by identifying opportunities that have the potential to grow as future market leaders with the right mix of capital, market access, policy support and technological inputs. In just about 12 months, Neev II has committed ~INR 525 crores across 4 companies in air pollution control technologies, Bio-CNG, Waste Management and Green Hydrogen.
Given the parentage of the Neev Funds, we have a very strong focus on governance practices that have been shaped by our LP's and global best practices in fund management. We understand that growing SMEs must incorporate solid governance frameworks and risk management procedures if they want to succeed in a continuously evolving business environment. At the Fund level, we have a market-oriented Investment Committee, comprising independent industry professionals that oversees the investment, asset management and exit choices. Additionally, the Funds include a Limited Partners Advisory Committee that offers strategic guidance on subjects pertaining to the fund.
The Investment Manager, SBICAP Ventures Limited (“SVL”), is a wholly owned subsidiary of SBI Capital Markets Limited (“SBICAP”) setup to carry on venture capital fund management activities. SBI Capital Markets Limited is a 100% subsidiary of the State Bank of India which is the largest financial institution in the country.
The Neev Fund is now in its fund II. Neev Fund I invested INR 5240 Mn. across 8 low-income states of India, impacting ~4 Mn. lives and creating ~12000+ jobs. This is a phenomenal success!
It would be interesting to understand the journey from Neev Fund I to II. What have been your learnings of deploying the maiden fund in high-impact sectors in India? How did you reel through the challenges and uncertainties of Covid-19 pandemic in your portfolio?
The primary objective of the Neev Fund is to make commercially attractive investments which create sustainable development which will provide economic, social and/or environmental benefits and create jobs. Neev Fund was set up to provide catalytic capital to companies in sectors and geographies where private capital had not flowed in the past. Neev Fund I has successfully made ten portfolio investments across sectors such as renewable energy, cold chain logistics, dairy, skill development, Agri-infrastructure, healthcare, waste management, biomass and entrepreneur development. The fund is also counted as one of the finest examples in India of integrating international standard Environmental, Social & Governance (“ESG”) principles within the portfolio companies while still making attractive commercial returns. This also led to Neev Fund winning the Tokyo Financial Awards in 2021 in the ESG Investment Category!
Neev Fund has also created a credible platform that facilitates investment, trade and technology transfers between India and the U.K. Given the sector and state focus of the Neev Fund, a significant number of portfolio companies are the first time private equity invested companies and the Neev Fund team works very closely with the management of these companies to bring them up to standards which are in line with global best practices.
The Neev I experience gives us a strong advantage in dealing with early and mid-stage growth companies. Through our engagement models and board positions, the team was able to understand the process of growing a young company; recognizing the major risks and challenges in the business, assisting the Companies in focusing on key strategic issues likely to be experienced by the businesses as well as preparing comprehensive mitigation plans. We also work closely to implement world class governance practices, which in turn help to reduce the risk to investment as well enabling subsequent rounds of funding into the Company thereby de-risking the business model significantly.
Neev Funds’ objective has always been to focus on sectors that create a powerful impact on climate mitigation and adaptation. We usher in cutting-edge climate solutions and amplify impact through the SME ecosystem, thus creating a reverberating effect on all lives and livelihoods connected. We believe that Neev II will continue the work that Neev I did, and at a larger scale.
Covid-19 was an eye-opener to us all. As the nation struggled to recover from the loss of lives, our SME ecosystem remained in a state of utter despair. Among our portfolio companies, 7 out of 10 were at the front line and kept their operations running for consumers in sectors like waste management, dairy supply chains, healthcare, power generation, cold chain for food and pharmaceutical. During this time, Neev Funds put together a unique one-time relief package that was designed specifically to provide short term liquidity support to portfolio companies to build back post the lock down. This helped the companies most affected by the pandemic to be able to weather the storm and sustain operations till the effects of the pandemic softened.
How is Neev II different from Neev I? Neev II supports growth-stage SMEs in sectors such as clean energy, electric vehicles, efficient use of raw materials, circular economy. Could you briefly elaborate your impact thesis for investing in these segments?
While the focus of Neev I was on creating infrastructure and investing in the low-income states in India to create sustainable businesses along with environmental and social impact, the successor fund aims to provide capital to SMEs across climate adaptation and mitigation including sectors such as renewable energy, efficient processes, electric vehicles, waste management, water treatment and sustainable agriculture.
The key thesis behind the chosen sector on the mitigation front, is to reduce emissions from improved energy access and renewable power generation, low emission transport and energy efficient solutions for buildings, cities and industries; and on the adaptation front, to increase resilience of vulnerable people and communities, improved health and well-being, and food and water security; improving resilience for the built environment and maintaining ecosystems under conditions of climate change.
The fund also looks to catalyze funding into these sectors and achieve a multiplier effect on the impacts generated.
Your Neev II portfolio consists of some very disruptive innovations in emerging areas such as waste-to-value, air pollution, green hydrogen etc. How do you foresee the market for some of these climate innovations evolve in the next few years in India? According to you, which segments within the climate spectrum are likely to observe faster market adoption in the country?
India is reported to be the third-largest CO2 emitter in the world and is projected to be responsible for as much as 11% of future global emissions by the year 2050! Prompt action is no longer the need of the hour, we are to be very honest catching up to what we should have done years ago. In this regard, Neev Fund, since its inception, has been committed to focus on making the world cleaner and greener through climate SMEs across sectors, straddling several SDGs. Neev II Fund has looked at the length and breadth of climate solutions and identified key sectors that need catalytic capital support.
Apart from green hydrogen and biofuels, we are particularly bullish on electric mobility, water treatment, energy efficient solutions and sustainable agriculture solutions and believe that these sub-sectors under the climate & sustainability umbrella are poised for exponential growth.
Neev Fund also leads the way in measurement and management of climate impact, having reduced 1.5 Mn. tonnes of carbon emissions so far through its portfolio. In our observation, the knowledge and execution of measurement of climate impact remains inadequate and sporadic in the country. We are keen to understand your experiences of tracking climate impact data with your investee companies, and if you faced any challenges in the process.
The fund monitors impacts on an ongoing basis for the investees’ contribution to sustainable development goals, climate action, employment generation and gender. Herein, the key challenges revolve around the awareness and the capacity to track such parameters at the portfolio companies’ level, since most of them are young firms that are in a growing phase. At Neev Funds, we actively engage with our portfolio companies to build their internal capability to not just track but to meaningfully improve upon these identified parameters. Portfolio companies see the merit of the interventions and have embraced Neev Funds’ interventions across climate action & ESG wholeheartedly.
