Vivriti commits debt financing of Rs 6,000 crore to sectors with high impact and low ESG risk
In its attempt to strengthen environmental, social and corporate governance (ESG) practices among Indian mid-sized companies, the Chennai-based Vivriti Group companies – Vivriti Capital and Vivriti Asset Management (VAM) – have incorporated a comprehensive ESG framework , an exclusion list and a scoring mechanism in its lending and investment practices.
Vivriti Capital is a Non-Banking Finance Company (NBFC) and Vivriti Asset Management (VAM) is a local fund manager focused on providing credit to middle market companies. The two companies committed over Rs 5,000 crore of debt financing to high impact industries and low ESG risk sectors in FY23.
“This year, of all the money we will invest, disburse or lend, at least Rs 5,000-6,000 crore will go to high impact industries including agriculture, health, clean energy, microfinance, affordable housing funding and education funding, to name a few. a few,” said Vineet Sukumar, CEO of Vivriti Capital Activity area.
“ESG principles have always been fundamental to what we do. But, until now, we have not proactively measured, monitored and created a separate framework around them. about 8 to 9 months,” he added.
Vivriti set up a two-person team that began to focus on ESG risks, specifically for each of the clients in its portfolio. Its ESG rating will go live within the next 30 days, after which each portfolio company it incorporates will have to go through a credit rating as well as an ESG rating. While credit rating reports are generated on a quarterly basis, Vivriti plans to run ESG ratings on an annual basis.
“Each time we perform due diligence on a company, our team sends out a five-page report with observations on operations, strategy, production, inventory, sales, processes, team structure and the governance. Now we plan to strengthen it by adding comments on ESG risks, ESG compliance gaps, policies, inadequate processes, etc. Detailed feedback is forwarded to the developer and CEO,” Sukumar said.
Over the next 6-12 months, Vivriti itself will seek to obtain its own ESG rating and also plans to register with leading global impact measurement organizations.
“The ESG rating will impact both access to funds and pricing as we expect to see pools of capital from international investors. We have already raised approximately $140-150 million in capital impact to date. Now, with a concerted effort to measure, track and engage with borrowers, this can become much more significant,” Sukumar said.
Asset management firm VAM is in advanced discussions with a few Western European development finance institutions (DFIs) for a climate mitigation bond fund. The fund, expected to be between $100m and $150m, aims to own 50% of clean energy assets, while the rest will be split between the agriculture, WASH (water, sanitation and hygiene) sectors. and health.
August 10, 2022