Profectus Capital Private Limited, a non-banking finance company focused on India’s micro, small, and medium enterprises (MSMEs), has raised $25 million (approximately INR 205 crore) from the International Finance Corporation (IFC) through the issuance of non-convertible debentures (NCDs). This marks the IFC’s first investment in India to finance energy-efficient (EE) machinery for MSMEs, positioning Profectus Capital at the forefront of green financing within this sector.
These NCDs are designated as green bonds because the proceeds will finance green assets. Profectus Capital has developed a Green Bond Framework in alignment with the International Capital Market Association’s Green Bond Principles. IFC’s investment is expected to accelerate Profectus Capital’s lending for EE equipment in MSMEs, a key contributor to India’s climate goals.
IFC also supports this investment and provides advisory services through the European Union’s Accelerating Climate Smart & Inclusive Infrastructure in South Asia (ACSIIS) program. The program aims to help Profectus Capital identify EE assets in its portfolio, strengthen operational capacity, and establish a growth plan for reducing greenhouse gas emissions.
K V Srinivasan, Founder, CEO, and Whole-time Director of Profectus Capital, commented on the partnership: “This investment from IFC is not only a mark of confidence in our business model but a pioneering move for financing energy-efficient machinery for MSMEs in India. With IFC’s support, we are poised to enhance capital investments for MSMEs and strengthen our market position.”
India’s MSME sector, comprising approximately 65 million enterprises, contributes 30% of the GDP and nearly 40% of exports. However, the sector faces a substantial credit gap, estimated at INR 25.8 trillion ($311 billion). With over 50% of MSMEs operating in manufacturing and spending up to 40% of their costs on energy, there is a significant opportunity to cut costs and emissions by upgrading to energy-efficient machinery.
Wendy Werner, IFC Country Head for India, remarked, “This investment will establish a foundation for the EE finance market for MSMEs in India. Through this partnership, we aim to support climate targets while fostering green, inclusive growth. Green bonds are relatively new to Indian financial institutions, and our collaboration with Profectus will demonstrate the commercial viability of lending to the energy efficiency sector.”
The collaboration between Profectus Capital and IFC is expected to stimulate growth in the MSME sector, making strides toward India’s sustainable development and climate targets.
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