Spanish investors believe Pahal can help deeply underserved farming community in India
Looking to boost its Agriculture and Allied Services portfolio leveraging on Europe’s impact investing firm GAWA Capital’s experience of working and supporting farmers from developing countries, Ahmedabad’s Pahal Financial Services has raised US$10 million (Rs.75 crore) through an equity round for expanding its reach to marginalised communities.
The fund came from Spain-based GAWA Capital (through its equity vehicle Huruma Fund) and a debt round from GAWA Capital’s advised debt vehicle (Magallanes Impacto FIL) and Northern Arc Capital.
Pahal has previously raised equity capital from Haryana’s Dia Vikas Capital and Singapore-based BOPA (Base of Pyramid Asia).
“GAWA’s support is a validation of our business model and our approach to new age microlending in India,” Kartik Mehta, Co-founder and Managing Director, Pahal Financial Services, said on 13 April 2022.
“Pahal was set up with a vision to serve the vulnerable sections of the society and has emerged as one of the fastest-growing microfinance institutions in India. Pahal’s vision will be further emboldened by this round of investment and plans to increasingly focus on the backbone of Indian economy, Agriculture,” Mehta elaborated.
“Pahal has just crossed the AUM of Rs.1,000 crore. This infusion will further strengthen Pahal’s ability to innovate into a full-scale digital micro-finance entity and position itself as a micro Fintech entity while simultaneously expanding its product range across diverse rural and semi-urban sectors,” elaborated Purvi Bhavsar, Co-founder and Managing Director, Pahal Financial Services.
“Coupled with the recently announced regulatory changes by the Reserve Bank of India for the micro-finance sector, Pahal is well poised to serve the under-served strata of the society.”
GAWA Capital Founders and Co-CEOs Luca Torre and Agustin Vitorica, observed, “The micro-finance sector in India traditionally has not been able to serve the small farmers with ad-hoc products.
“We believe Pahal is ready to take the challenge and serve this untapped segment with excellent products and services.”
“We are very excited to partner with Pahal and are eager to support them in their next level of growth and expansion into new geographies and products. We believe that with the help of Pahal, deeply underserved farming community in India can focus on Agriculture and increase their income and standard of living,” said the duo.
Pahal, with a mission to deliver quality services to its customers by a range of financial and non-financial products and services, has so far touched the lives of almost a million households from marginalized communities, through their 210+ branches across its 8 states – Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Bihar, UP, Chhattisgarh and Haryana.
Pahal constantly strives to identify the changing needs of its existing and future customers and accordingly designs the products and services to support them. Pahal, till date has served 65,000+ borrowers for agriculture purposes and with this current investment from GAWA Capital, it is looking to boost its Agriculture and Allied Services portfolio leveraging GAWA’s experience of working and supporting farmers from developing countries.
This will be Huruma Fund’s second equity investment in India, demonstrating its conviction in boosting the country’s Agri-based economic development as well as confidence in Pahal’s team to execute this vision.
Magallanes Impacto FIL managed by Magallanes Value Investors and advised by GAWA Capital – and Northern Arc Capital will be contributing equally to debt capital raised by Pahal as part of this transaction.
Unitus Capital was the exclusive advisor for Pahal for this equity raise.
Pahal is a RBI-registered Non-Banking Financial Company that provides micro-finance services to low-income households. Kartik Mehta and Purvi Bhavsar, ex-bankers with over 50 years of combined experience, founded the company in 2011. Based in Ahmedabad, it has 210+ branches with over 1,800 employees. Currently, Pahal serves over 350,000 active clients.
Huruma Fund, launched by GAWA Capital, is the largest social impact fund in Spain. It aims at providing access to credit to farmers in poor rural areas in Latin America, the Caribbean, sub-Saharan Africa and Asia, by providing debt or equity (as well as Technical Assistance) mainly to Micro Finance Institutions. The total budget Huruma Fund is 120 million euros contributed by the European Union, FONPRODE (an instrument of the Spanish International Cooperation for Development Agency-AECID), COFIDES and private investors.
Founded in 2010, GAWA Capital is the leading impact investing advisor in Spain, having mobilized over 195 million euros from public and private investors. GAWA Capital aims to improve the life of low-income communities by promoting investment in social enterprises, while providing a financial return to their investors. Since its creation, GAWA has pioneered the introduction of impact investing assets in Spain, launching three funds that invest in emerging countries focusing on inclusive market-based solutions to social problems.
Magallanes Impacto FIL is the first open ended impact investing fund in Spain managed by Magallanes Value Investors SGIIC, S.A. GAWA Capital is an investment advisor to this social impact fund that invests fundamentally in unlisted debt of social microfinance institutions that grant microcredits to disadvantaged persons in developing countries. fiinews.com
