Project detail - South Asia Growth Fund III, LP

Who is our customer

South Asia Growth Fund III, L.P.(“SAGF III”), a limited partnership registered in Canada, is a USD 300 mln (target) private equity fund. The Fund’s objective is to generate long term capital appreciation through equity and equity-linked investments in companies that seek growth and expansion opportunities addressing climate mitigation, adaptation and circular economy, with a focus on the middle market in India. SAGF III is managed by the Indian team of GEF Capital Partners.

What is our funding objective?

SAGF III plans to make 8-10 minority investments in Indian companies that have a green / climate angle in their business. This includes renewable energy value chain, energy efficiency, resource/ efficiency, waste recovery and climate tech / digital solutions.

Why do we fund this investment?

SAGF III will invest in growth companies that are leading in their field in climate solutions in India. FMO has committed to SAGF III to increase its exposure to green investments in India and contribute to the Sustainable Development Goals 7 (Affordable and Clean Energy) and 8 (Decent Work and Economic Growth).

What is the Environmental and Social categorization rationale?

SAGF III is considered high-risk (A) E&S fund due to the gross risk exposure of certain investments in their pipeline most prominently relating to supply chain risks and health and safety at site. Based on the performance of previous funds, E&S management practices are considered mature and open to continual improvement. E&S and climate are an integral part of the investment process of the fund. The investment team (with support and guidance from the ESG Team) is responsible for identifying and addressing ESG concerns and opportunities in each investment. The SAGF III has a dedicated ESG team with a Head ESG, who will be responsible for facilitating and addressing such concerns/ issues and opportunities for every investment and another ESG manager for day-to-day support. The investment team works closely with the fund’s ESG team/manager to identify a suitable technical consultant and design the scope of work. In conjunction with the Head ESG, the investment team will work with the company management to design action plans, which are incorporated in the legal documentation. The fund manager uses a two-pronged approach of preliminary E&S DD and a more detailed E&S DD afterwards considering no red flags identified before. The investment team will also work closely with the investee company to implement the necessary action plan and to support the company on any other E&S matters including capacity building, as needed. The fund manager has a strong E&S track record and is committed to being the best-in-class in their investments.