Innovation Hub India

INDIA

Impactful Investing

“Investors should look at the social impact of the business as the best opportunity for large financial returns by investing in organisations that are helping to provide low-income individuals with quality education, affordable healthcare, and other basic needs”, Eric Savage, CEO & Co-founder, Unitus Capital

Investors are waking up to the fact that there is an opportunity to gain excellent financial returns while transforming the world, and by extension India, into a significantly better place. The term impact investment has begun to gain currency among organisations, and in recent years, Bengaluru has emerged as the centre of the impact investing world.

Unitus Capital is one such impact-focused investment bank based out of Bengaluru and was incubated by Seattle-based Unitus Labs. Its goal was to assist socially impactful organisations to raise capital, which would improve the lives of individuals from low-income groups.

Using business and capital markets principles to make the world a dramatically better place has also made the bank successful. For 5 years in a row, Unitus Capital has been ranked as the number 1 investment bank in India, by both VCCircle and Venture Intelligence, in terms of the number of transactions. In 2018, it was named by News Corp VCCircle as Investment Bank of the Year.

Becoming the best bank in its sector (where it was measured against traditional investment banks, which help large companies and wealthy people) was not its original goal. “We just wanted to raise money for a lot of fantastic companies”, Eric Savage, CEO & Co-Founder, Unitus Capital, tells Aditya Mendonca.

With a seed capital of US$5.5 million, Unitus Capital is the only investment bank in the world to have successfully launched during the 2008 global financial crisis when a number of investment banks worldwide shut down. It has been successful in helping around 90 different companies raise capital of about US$2 billion with equity and debt. It has helped facilitate around 40 exits for different investors and transactions, with an extraordinarily high median IRR (internal rate of return) in excess of 40%. This has ensured that investors remain interested in the firm’s proposals.

During its early days, Unitus Capital was entirely focused on the microfinance sector because of its parent Unitus Labs’ work in that sector. Realising that it had to invest in other sectors to find a comprehensive solution to poverty, it expanded its team to add experts in healthcare, education, renewable energy, and agriculture, an area where the bank developed its own expertise. In a new foray, it is investing directly in companies, through the Unitus Capital Inclusive Credit, or UCIC, a non-banking financial company that will lend to companies, mostly with structured debt solutions.

The bank’s future plans include growing its base business in India in sectors such as education, healthcare, and agriculture, as well as expand geographically in Southeast Asia and eventually into Africa.

Savage picks two companies from its stable as those with future potential: Vindhya is a business process outsourcing company that almost exclusively hires people who are differently abled. Unitus Capital raised money for Vindhya 8 years ago and helped it scale up from a small organisation with 100 employees to the present strength of 2,000.

Forus Health is a disruptive healthcare technology company with which Unitus Capital began working at the seed stage and raised a couple of rounds of equity from capital venture capital firms such as Accel and IDG, which have experience in scaling medical tech companies. Forus primarily screens for the five major causes of blindness and its devices are affordable and portable, with sales in 25 different countries.