Lok Capital Fund I announces exit from RuralShores with 6x returns
Lok Capital, India’s leading impact investment fund today announced that it has exited from the investment made in RuralShores from Lok Capital Fund I, in 2009. The exit is highly profitable for Lok Capital, generating six times the initial investment (in rupee terms). RuralShores, India’s first rural BPO (business process outsourcing), was the first non-MFI company in Lok Capital’s portfolio, and helped shape Lok Capital’s broader investment philosophy on impact investing. Lok Capital continues to be an investor in Rural Shores through its investment from Lok Capital Fund II, made in 2011. Apart from Lok Capital, HDFC is also an early investor in RuralShores.
The RuralShores investment has proved successful in terms of financial returns as well as the social impact created. Established in May 2008 by Mr Murali Vullaganti, RuralShores was created to bring jobs to villages, rather than moving rural people to city jobs. RuralShores aims at improving skill sets of rural youth, providing local employment and curb migration and increasing income levels of the target group. Today, it is a highly successful rural BPO with 18 delivery centres across various Indian states and employs over 2500 rural youth. The company achieved revenues of Rs 31.5 crore in FY2013. Significantly, women constitute 45% of the RuralShores workforce.
Speaking on the exit, Mr Venky Natarajan, Managing Partner, Lok Capital, said, , “RuralShores brought the right elements to become the anchor investment for Lok’s portfolio outside of microfinance. Right from the beginning, we were convinced about the business model’s effectiveness in generating rural employment. This investment proves that livelihood generation is a sustainable way to create inclusion among the low income group. The model is replicable in various sectors and has the potential to open up endless opportunities to create impact”. Natarajan serves on the board of RuralShores.
Talking about the association with Lok Capital, Murali Vullaganti, founder, RuralShores said, “It is commendable how Lok Capital saw the potential in this idea – of generating livelihood in rural areas through the BPO business model – and came in as an early stage investor. Lok’s team has been instrumental in helping us build a strong team, scale significantly and identify new business opportunities”.
Lok Capital’s current portfolio includes leading microfinance companies and investments across SME lending, retail lending, healthcare and education. Profitable exits thus far include Spandana, Janalakshmi and Satin.