Soros, Google.org, Omidyar plans SME firm in India
February 20, 2008
Soros Economic Development Fund (SEDF), Omidyar Network and Google.org announced that they are working together to create a $17 million (around Rs 68 crore) small to medium enterprise (SME) investment company for India to create job opportunities and spur greater economic participation. The joint investment company is expected to provide capital to small and medium businesses in underserved markets.
Most of the existing SME funds make investments in the $3-5 million range leaving out a significant portion of the market. The investment company will target this “missing middle” with equity investment between $500,000-3.5 million. Many small and medium Indian businesses lack formal funding options because of the gap between loans offered by microfinance institutions and the larger investments of commercial banks and private equity firms, said a press release from Google India.
SEDF, Omidyar Network and Google.org plan to locate the investment advisor at the Indian School of Business (ISB), Hyderabad to leverage the school’s SME expertise. Dr. Reuben Abraham, currently ISB’s director of the Base of Pyramid Lab and a board member of SEDF, is expected to be the senior advisor.
The investment company will hire an experienced investment advisor and two experienced senior investment analysts based in India to recommend and build the pipeline of portfolio investments.