Project detail - BlackSoil Capital Private Limited

Who is our prospective customer?

Our prospective customer is the merged entity of BlackSoil and Caspian. FMO has been invested in Caspian Impact Investments (“Caspian”), an Indian NBFC, providing debt to microfinance institutions (MFIs) and other impact-oriented small- and medium-sized enterprises (SMEs) since 2006. Caspian is in the process of a merger with BlackSoil Capital Private Limited (“BCPL” or “BlackSoil”), which is an Indian NBFC founded in 2016 and focuses on growth-staged clients, offering alternative/venture debt to emerging NBFCs, MSME players (micro-enterprises and SMEs), and start-ups across segments (e.g. fintech, healthcare, logistics, mobility,). BlackSoil is currently awaiting regulatory approval for a merger with Caspian (expected in September 2025). The merged entity will maintain the core businesses of BCPL and Caspian, focusing on lending to small financial institutions, SMEs, and start-ups. Key products will include working capital finance, MSME lending, onward lending (wholesale), venture debt, supply chain finance, and co-lending.

What is our funding objective?

The merger between Caspian and BlackSoil presents a strategic opportunity to create the 3rd largest player in the impact wholesale lending industry in India. The merger will enable the company to leverage economies of scale, reduce the cost of borrowing, and improve operational efficiencies. The merger will create a strong brand offering a complementary product suite, combining business verticals (venture debt, term loans, etc.) and leading to a diversified portfolio. The merger is anticipated to harvest more business from existing clients with ~10% of the combined assets under management (AUM) consisting of common clients. Furthermore, the merged entity will be able to take larger exposures to existing mature clients and foster long-term relationships with clients across their journey from the early to the growth stage. The merger is also intended to improve the management and governance, by bringing together the collective expertise of 165+ employees and being a more attractive employer offering broader growth opportunities.

Why do we want to fund this investment?

FMO is supportive of the merger via a share swap. Additionally, it has been proposed that existing BlackSoil & Caspian shareholders infuse primary capital to support the growth of the merged entity as part of the deal construct. FMO believes the merger would result in strategic synergies for both companies. While the merged entity would benefit in terms of scale and network, it would also aid in improving management & governance and improve the marketability of shares for all shareholders.

What is the Environmental and Social categorization rationale?

BlackSoil is rated as an E&S Category B client (medium risk) due to its focus on SMEs, financial institutions/fintechs, and supply chain businesses instead of retail customers, with a majority of its portfolio being impact-driven (currently 63%). Furthermore, BlackSoil focuses on gender diversity, with a notable percentage of women members in committees, investment, and finance teams. Caspian is rated as an E&S Category B client (medium risk) as well and maintains a strong commitment to environmental and social (E&S) risks and performance. Caspian was the first Indian impact investing firm to be granted BCorp certification.