Caspian Debt today announced an investment of $20 million by U.S. International Development Finance Corporation (DFC) as long-term debt. The new facility, which is a combination of Subordinated and Senior Debt will support Caspian Debt in providing customised, collateral-free loans digitally to professionally managed enterprises operating in high impact sectors in India, including microfinance, SME finance, affordable housing, affordable healthcare, sustainable agribusiness, and education.
Caspian Debt primarily works with first-generation social entrepreneurs, who find it difficult to raise working capital as they run new-age businesses with an asset-light model, and have no collateral to offer. Many of these companies are well capitalised and are growing rapidly but require more responsive lenders.
Caspian Debt with this facility is also committed to contributing 33% of its investments to women- centric businesses and fulfilling its commitment to DFC’s 2X Women’s Initiative. 2X has catalyzed over $2 billion of private sector investment in businesses and funds owned by, led by, or providing a product or service that intentionally empowers women in the developing world.
“Caspian Debt has lent over $219m to over 140 early stage enterprises contributing to 13 Sustainable Development Goals (SDGs) over the last 7 years. We are delighted to deepen our relationship with DFC, as our partnership continues to provide much needed firepower to support under-served emerging enterprises and women-centric businesses. We will use this funding to focus on promoting disruptive entrepreneurs, who are pushing the envelope for creating sustainable impact. This vote of trust from DFC is even more valuable at a time when the whole world, especially the small and medium companies, are dealing with the economic aftermath of a global pandemic,” said S. Viswanatha Prasad Founder and Managing Director of Caspian Debt.
“Small businesses are the engine of growth and job creation in India, and high impact businesses are the vehicle for achieving a more responsible, sustainable and equitable economic future. We approved our first loan to Caspian Debt in 2014 when it was still an early stage venture. Five years on, the results have been impressive. This follow-on loan is an expression of confidence we place in the important work that Caspian Debt does and demonstrates our long-term commitment, particularly in these uncertain times,” said Anthony Randazzo, CFA Investment Director on the Social Enterprise Finance Team at DFC.
DFC, formerly the Overseas Private Investment Corporation (OPIC), has supported Caspian Debts growth since 2014. This new financing, partly in form of Tier-2 capital, will further strengthen Caspian Debt’s capital adequacy and ability to leverage more debt funding leading to strong multiplier effect. Long-term debt funding to impact focussed entities like Caspian Debt will enhance their capacity to provide flexible tenure debt solutions to meet the requirements of the professionally managed entrepreneurial ecosystem in today’s challenging economic scenario.