EC’s work in India:
The team at Encourage Capital has decades of experience investing in financial institutions across emerging markets and has launched asset-based financing companies, invested in growth-stage financial institutions and innovative clean energy businesses, served in governance roles on corporate boards, and contributed thought leadership in climate finance. In India, we have invested in various financial institutions servicing underserved segments that address critical financing gaps and development opportunities over the past 15 years.
In 2017, we identified a 15 GWp rooftop solar market opportunity ($9B in financing needed) for MSMEs that was largely unaddressed due to lack of financing. We then raised a growth equity fund, Encourage Solar Finance (“ESF”), to invest in financial institutions and support them to develop and distribute solar finance products for these MSMEs. We also support them with strategy development, debt and equity fundraising, governance, capacity building, as well as build partnerships with high quality rooftop solar installers. To support our efforts, we also arranged a sizeable capacity building facility through grant funding from KfW and structured a risk mitigation facility with US DFC to accelerate the development of the ecosystem and address the main barriers that hinder the rooftop solar market for MSMEs today (ensuring quality installation, lender’s security concerns, customer awareness, etc).
For example, our first investment from ESF was in Electronica Finance Ltd (“EFL”) in Pune, a specialized MSME lender with a 30-year operating history that is a pioneer in equipment finance. Despite COVID, EFL has now financed close to 400 rooftop solar projects deploying more than our investment capital within 3 years of launch and we expect them to disburse a multiple of our investment towards rooftop solar projects over the next few years. In a short time, EFL has emerged as a market leader in solar finance for MSMEs.
Institutions like EFL and Annapurna Finance (another recent investment from ESF) are leading the way to demonstrate how the financial sector can help drive the clean energy transition for underserved segments. But this is just the beginning. Approximately $3 trillion is required until 2030 for India to meet its climate goals and the financial sector will play a critical role. We believe that such strategic investments in the financial sector, paired with capacity building and risk management tools, can provide a critical leverage point to deliver the financial products and services to support these climate goals. We believe that there are enormous opportunities for us to expand our work to make the clean energy transition affordable for underserved customers across renewables, energy efficiency, electric vehicles, circular economy, green buildings, etc.
Tarun’s bio:
Tarun is a Partner at Encourage Capital focused on clean energy finance and financial inclusion investment strategies. Tarun has been with the firm since 2011 starting with Wolfensohn Fund Management. Tarun has been actively involved in the firm’s investments in Electronica Finance, Annapurna Finance, DCB Bank, Fabindia, National Stock Exchange of India, Repco Home Finance, and Ujjivan Financial Services. Prior to joining the firm, he worked in the deals team of PwC India where he worked on transactions across financial services, consumer branded goods, energy, chemicals and telecom sectors. Tarun graduated with a B.E. from Delhi College of Engineering and an M.B.A. from Faculty of Management Studies, University of Delhi. He also holds the CFA charter.
Background:
Encourage Capital (“EC”) is a research-driven asset management and advisory firm that seeks to leverage private capital to solve critical environmental and social problems while generating compelling financial returns for our investors. We work with strategic and financial investors, impact investors, family offices, nonprofits and development finance institutions across our strategies. EC was formed in December 2014 through the combination of Wolfensohn Fund Management, LP ("WFM'') and EKO Asset Management Partners, LLC. On behalf of our clients, EC develops and implements investment strategies at systemic leverage points that deliver financial and impact outperformance.
