Nuveen backs Indian ag lender’s $55m Series D

Nuveen, the asset management subsidiary of TIAA, has led a $55 million Series D financing round for Samunnati Financial Intermediation and Services, a rural lender headquartered in Chennai, India.

Samunnati announced in late May that Nuveen was joined in the round by existing investors Elevar Equity, Accel Partners and responsAbility, a Swiss firm specializing in development investments that purchased a significant minority stake in Samunnati in January 2018.

The financing brings Samunnati’s total fundraising to 5.9 billion rupees ($84.5 million; €75.2 million) since its 2014 founding.

Samunnati offers customized working capital loans to community-based organizations and receivable finance to small and medium-sized enterprises, indirectly supporting two million farmers across 14 of India’s states, according to a statement.

Samunnati’s average loan size is $1,650 with interest rates typically ranging between 20 and 25 percent on terms from 15 day to four years, responsAbility’s head of agricultural investments, Rik Vyverman, told Agri Investor in January 2018.

Vyverman said Samunnati has established relationships with banks and other non-bank financial institutions that lend to the company, allowing it to finance farmers, traders, wholesalers, input manufacturers and others.

Samunnati chief executive Anil Kumar said the Series D capital would allow the lender to expand its exposure into fruits and vegetables and food processing, especially in states including Madhya Pradesh, Maharashtra, Jharkhand, Chhattisgarh, Bihar, Karnataka, Andhra Pradesh and Telanga.

“We see a strong potential for alignment between the impact investing arm of Nuveen and Samunnati’s focus on providing working capital to value-chain players along with aggregation, market linkages & advisory services,” he said.

Nuveen impact investing portfolio manager Rekha Unnithan told Agri Investor that the firm was introduced to Samunnati by Elevar Equity, with which it has worked on other investments.

The investment in Samunnati, Unnithan said, reflected two of Nuveen’s impact theses: inclusive growth and resource efficiency. In a February paper, Unnithan identified another theme of Nuveen’s impact investments as affordable housing.

“We are looking for a mismatch between the spending power of the underserved consumer and their needs and desires to access quality products and services,” she said. “This really becomes much more pertinent to Indian farmers and their access to finance for working capital through farmer/producer organizations.”

Nuveen’s impact investments seek commercially-orientated returns and have included US investments, as well as others in Latin America and South-East Asia, added Unnithan.

Though Nuveen does not invest in Indian farmland, according to Unnithan, the farmland investment team’s knowledge of farmers’ financial conditions, access to quality inputs and waste-recycling opportunities is relevant worldwide.

“There are insights that come from those platforms around the opportunities and challenges that need to be solved for from an agriculture perspective that potentially from an impact standpoint, we can hit both from an inclusive growth and resource efficiency,” she said. “We often have a counterpoint of asking questions of the farmland team as we come across interesting investment solutions.”