Lok Capital has made the first close of its fourth fund with commitments totalling $90 million, the impact investment firm said. The Chennai-based fund said the final close at $150-$200 million is expected by September this year. Limited Partners, or investors, in its first close which took place last month included British International Investment (BII), Dutch development bank FMO, Evolvence, and Blue Earth, as well as new names like the US International Development Finance Corporation (DFC) and OeEB (Austrian Development Bank).

The fourth fund will invest in financial services, including fintech, health-tech, food and agri-tech, and climate tech. It will also include a stronger focus on tech-enabled models in the sectors that the company is present in. “Financial inclusion is front and centre for us,” Venky Natarajan, co-founder and partner at Lok Advisory Services, which advises the funds of Lok Capital. “It is the most important sector for our fund. Sustainability is an emerging space, and we are looking at themes that focus on decarbonisation like the electrification of vehicles, renewable energy and even alternative proteins.”

With Lok IV, the fund will offer flexible cheque sizes starting as low as $3 million and going up to $15 million, he said. Lok Capital has hired senior hands like ed-tech entrepreneur-turned-fund manager Hari Krishnan, active early-stage startup investor Vignesh Ramanujam, financial services-focused private equity investor Rajat Bansal and solar energy entrepreneur-turned-investor Vikram Dileepan to fuel its next phase of growth.

The Lok III fund had 11 investments of which it had completed one full and three partial exits. Lok III invested in financial services, fintech, health, food and agri-tech. Some investments in Lok III include Veritas, Mintifi, Renewbuy and Akshayakalpa. Natarajan said the number of exits and quality of exits stack Lok in the top 1 percentile of all PE/VC funds in India, not just impact investing firms. He said Lok Capital's focus has always been on companies that have an established business trajectory.

“We invest in companies that have a product or service with an ability to monetise. Business model, revenue stability and companies that can scale in the Indian market, raise capital and provide an exit are what we ultimately invest in,” he added. Natarajan said the climate tech space will sparkle and gender equity was also an opportunity that it was evaluating closely.

“The opportunity set is quite large but we have to look at opportunities that provide a 25% rupee return and for that, these subsets are still evolving as they are nascent. With financial tech and agri-tech, there's an intersection of reasonable returns and impact. For climate tech, we have to be more patient,” he said.

In December that Lok IV made its first investment in aquaculture value chain player Aquaconnect. Lok led the round and infused $3 million in the $10 million equity round. Aquaconnect improves farming outcomes and post-harvest sales for farmers, improving agricultural incomes for small-holder aquaculture farmers.