1. Measuring
Exits in Indian
Impact
Investments
Author: Shaun Robinson
Date: 25/6/15
The Indian impact investing space is associated
with few exits and an unproven ideology of
social and financial return. This report
aggregates 64 exits over the past decade to
define investor performance across exits.

2. July, 2015
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PREFACE 2
HISTORY OF IMPACT INVESTING 3
INVESTORS: 3
SECTORS: 3
EXIT TYPES: 3
GLOBAL EXITS: 4
BEST PRACTICES FOR AN EFFECTIVE EXIT 4
TIMING THE EXIT: 4
TAKING THE RIGHT EXIT APPROACH: 4
IDENTIFYING THE RIGHT SELLER: 4
DATA SOURCING 5
EXIT MULTIPLE AND IRR METHODOLOGY: 5
DATA ANALYSIS 6
EXITS BY GEOGRAPHIC REPRESENTATION: 6
YEARLY EXITS AND CORRESPONDING IRR: 6
EXIT MULTIPLES AND IRR BY SECTOR: 7
EXIT TYPES BY SECTOR: 7
COMMERCIAL VS IMPACT INVESTORS: 8
INVESTMENT HOLDING PERIOD ON IRR: 8
RETURNS ACROSS EXIT TYPE: 8
EXIT STAGE AND IRR: 9
PRIMARY AND SECONDARY VS. SECONDARY EXITS 9
MICROFINANCE: 10
CASE STUDY 1: SKS MICROFINANCE 11
CASE STUDY 2: MILK MANTRA DAIRY PVT. LTD 13
CONCLUSION 14

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Preface
India is poised for growth. A country at a tipping point, with
an inherent entrepreneurial spirit, demographic dividend,
and recent proliferation of access to ideas and services. The
current ecosystem is conducive for investor capital with an
already impressive record of high growth, scaled, for profit
impact enterprises. The accelerated infusion of capital and
the confluence of traditional investors with impact focused
investors will test the nature of impact investing as financial
returns and social impact intertwine.
Ecosystem enablers will be paramount in establishing and
standardizing impact measurement frameworks. As the
pillars of impact investing are tested, the adoption of such
practices will protect the integrity of the space as well as
solidify the true social impact derived from the influx of
capital.
With almost a decade of impact investing activity in India,
strong exits remain a persistent barrier to widespread market
movement. The general consensus among industry
practitioners is investor-friendly exits are limited with
relatively lower returns compared to commercial
investments and exits. This report compiles all available exit
data within the impact investing sector in India, and critically
examines these exits to provide clarity and analysis to an
opaque field. Data mined from the past ten years of activity
will be compared across a variety of inputs and factors to
demonstrate trends in the space.

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History of Impact Investing
A stark inability to provide access to basic energy,
healthcare, education, water and sanitation needs through
government means, and the unaffordable alternatives
provided by various private ventures created a searing gap
for the 800 million low income citizens of India. This
converged into an unparalleled, widely untouched market
with a disposable income of USD $358 billion1
.
This market was widely dependent on philanthropic and
governmental programs or strictly commercial ventures. A
shift to for-profit, impact enterprise was accompanied by
the entrance of impact investors in the early 2000’s,
presenting a pivot in traditional investment thesis. The
dichotomy and gap between “impact first” and “finance
first” narrowed through the efforts of pioneering investors
such as Aavishkaar and Acumen. This infusion of capital
sparked tremendous growth in impact enterprises and a
new landscape emerged emphasizing scale and
sustainability to drive both financial return and social
impact.
Investors: Impact investing within India has benefitted from
a range of domestic and international investors spanning
commercial and impact focused goals. Development
Finance Institutions (DFIs) contribute a majority of the
incoming capital, with more than 90% of the total direct and
indirect investments made in India (GIIN, The Landscape for
Impact Investing in South Asia). This amounts to USD 5
billion in direct investments and USD 2.6 billion in indirect
investments. This is coupled with impact investors
contributing over USD 435 million across Fund Managers,
Foundations, HNWIs, Family Offices, and Commercial
Investors.
Sectors: A majority of the 220 plus impact enterprises to
receive funding operate in the microfinance and financial
inclusion sector, with 54% of impact investor capital in
microfinance institutions and 17% in Non-MFI financial
inclusion1
. While impact investors invest heavily within the
financial services realm, DFIs have a more diversified
approach. According to the Global Impact Investing
Network (GIIN), manufacturing, renewable energy, financial
services, and agri-business constitute 66% of the near USD
5 billion of direct DFI investment in India.
Exit Types: The pressure to generate balanced social and
financial returns presents a challenge as more investors
enter the space. Investors allocating capital to both
traditional and impact investments cite their top
motivations for impact investments as; a commitment to be
a responsible investor, an efficient way to meet impact
goals, and a response to client demand. This is amplified by
investor expectations, with 55% of investors expecting to
realize market rate returns in their impact investments (J.P
Morgan, Eyes on the Horizon). Lastly, difficulty exiting
investments is a persistent challenge to the growth of
impact investing.
The four exit options available to an investor are IPO,
secondary sale, strategic sale, and buyback. Exiting via IPO
offers the highest return potential with the investor selling
shares to the public market as the investee becomes listed
on a public exchange. Secondary sales are the most
common in the impact space, with a new PE/VC investor
purchasing the equity stake of a company from an existing
PE/CV investor. The investee is removed from this
transaction with capital flowing only from the existing
investor to the new investor in a purely secondary
transaction, while the purchase of initial investor’s shares
and an infusion in the investee denotes and primary and
secondary exit. Strategic sales are defined as the sale of a
PE/VCs equity stake to a third party company, which is
typically larger and operates in the same sector
domestically or internationally. Lastly, buybacks are the

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purchase of a PE/VC investor’s equity stake by either the
investee company or its founders/promotors.
Global Exits: Exit data is not readily available or easily
accessible, but the data that has been aggregated
demonstrates the accelerated growth in exits on a global
scale. Fund managers make up the majority of exits, with
96% of investors seeking competitive return or close to
market return. The sector distribution gravitates toward
financial services, with exits in MFIs and non-MFI financial
services totaling 34% of all exits. Agri-business and
healthcare account for 12% each. The geographic
breakdown favors South Asia, with 32% of total exits,
followed by sub-Saharan Africa and WNS Europe each
contributing 17% of total exits. Strategic sale and secondary
sale are the two most frequently used exit strategies with
40% and 37% of all exits, respectively. The holding period
for global impact investments is generally longer, with 42%
of exit investments were held for five or more years (J.P.
Morgan, Eyes on the Horizon).
Best Practices for an Effective Exit
The success of an investment is measured by the returns
generated during an investor’s exit. While investee
companies might be extremely successful in expanding and
generating profits, it is essential that this produces positive
return to their investors. Typically, for an investment in a
commercial entity, IRR and exit multiple become the key
parameters used to analyze the magnitude of the return.
However, impact investing has a double bottom-line
approach where social returns and impact created are vital
qualifiers for defining success.
For an investor to make a socially conscious and financially
strong exit, all exit options must be properly analyzed
before entering an investment. This foresight will guide the
company’s performance and vision as the expected exit
type will be communicated and anticipated at the initial
investment stage. Impact investing separates itself from
traditional investing through its responsible investing
approach. Responsible investing explicitly acknowledges
the relevance of environmental, social and governance
factors (ESG) for the investor. This holistic practice is
contingent on effective, strategically aligned exits. Once
the investment is made, continuous efforts should be taken
by the investor (hands-on or otherwise depending on the
approach) to enable the company to shift growth stages
and ensure a smooth and successful exit. Successful exits
are framed by the following parameters:
Parameters for Successful Exit:
1. Timing the Exit
2. Taking the Right Exit Approach
3. Identifying the Right Seller
Timing the Exit: Plans for exit should be considered before
entering an investment. Discussing exit planning with pre-
existing shareholders, co-investors and management
fosters an environment of transparency and trust. Exit
planning should be included in pre-investment due
diligence, dependent on the stage of market development.
It is vital that capacity for growth capital and technical
expertise mesh with the investee’s operations and vision.
Responsible investors must enable and support investees
and this alignment is critical for a successful deal and exit.
Political aspects and other unavoidable, external factors can
alter exit timing. Rarely, do exit opportunities materialize
as planned, emphasizing the importance of investor
adaptability and flexibility.
Taking the Right Exit Approach: Selecting the right approach
among the exit types is as important as timing the exit itself.
It will be noticed in this report that there is significant
difference in the return to investors through different exit
types. External factors like political climate, investor
confidence in the market, market performance among
others have significant bearing on the type of exit to be
favored by the exiting investor. Some of the key internal
considerations while choosing the type of exit are
company’s stage, fund life, tax-efficiency and duration of
investment.
Identifying the Right Buyer: Strategic alignment is critical,
therefore, responsible investors must ascertain the buyer’s
intention and commitment to the investee’s mission.
Discuss the long term vision of the potential investor, and

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analyze the likelihood the investor’s actions will remain
within the scope of the investee. Also, it is important to
consider the potential investor’s ability to add value to the
investee, this entails strategic direction, specialized
expertise, and growth capital. Lastly, the exit should be
contingent on the comfort level of the investee
management team with the potential investor. Considering
that most of the impact investors are skewed towards the
seed, early and growth stages, exits in general for impact
investors would be secondary to bigger commercial
investors.
Data Sourcing
The data collection process is a mixture of primary and
secondary research. Unitus Capital has facilitated multiple
exits in the space, and directly incorporated this data into
the report. A majority of the deals analyzed are sourced
from Venture Intelligence (VI), and such, information is a
materialization of deal details communicated from
investors to VI. A total of 64 partial and complete exits will
be analyzed in the report. A single exit is inclusive of
multiple rounds or tranches of funding, as well as multiple
partial exits by the same investor, while a bundle of
investors in the same company, at the same time, will be
treated as a separate exit for each individual investor.
Fifteen of the analyzed deals are sourced by Unitus Capital,
with the remaining 49 sourced from VI.
Exit Multiple and IRR Methodology: All data points from
Venture Intelligence were rigorously evaluated for
accuracy. Initial data points given in INR were converted to
USD via www.Oanda.com, and all exit multiples and IRR
figures are represented in USD unless specified otherwise.
In case of multiple rounds of investment by an investor in a
company, we have used the First-in-first-out method to
arrive at IRR and exit multiple. Lastly, social impact figures,
loan portfolio growth, and revenue growth figures are
sourced from www.mixmarket.org.
Deal exits were selected in accordance with the GIIN
definition of Impact Investing, “investments made into
companies, organizations, and funds with the intention to
generate social and environmental impact alongside
financial return,” and align with Unitus Capital’s investment
thesis. All exits within the energy sector represent
renewable energy enterprises, and all healthcare and
lifescience enterprises affordable and accessible services to
the underserved.
The data analysis will present data collected across sector,
year, exit multiple, IRR, stage of exit, type of exit, exit
horizon, and region to establish trends within impact
investing.

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Data Analysis
Exits by Geographic Representation:
In line with the regional investment profile of India, a
majority of exits have occured in Southern India. This
presents a clear linkage, as a high concerntration of investor
capital resides in Karnataka and Tamil Nadu. Exits in
Southern India are mildly diversified across sectors with 14
exits from Microfinance Institutions (MFIs), 10 from
Education, 9 from Energy, 6 from Healthcare, and the
remainder spread evenly across remaining sectors. As the
ecosystem in Southern India continues to harness and
enable entrepreneurial ventures, we expect the amount of
investment and subsequent exits in Southern states to
consistently grow. Western India has a significant
proportion of total exit value, with exits in Suzlon energy,
located in Pune, accounting for $921mm of the total $969
mm. Northern India has observed nine exits out of the 64
analyzed, with six of the nine exits from microfinance and
financial institution sectors. Northern India has attracted
attention from many ecosystem builders and impact
investors due to the large untapped market1
. It remains to
be seen how the exit scenario shapes up in this region
during the next five-year period, which is when most of the
investments will reach the end of their cycle. Exit activity
has been limited in the East and Central parts of India during
the period under consideration. These regions have
traditionally not attracted significant impact capital, but the
investment climate in this region is changing due to
increased intrerest and support from Development
Financial Institutions (DFIs) like SIDBI among others. This
attention might lead to further investment, but considering
its untested nature, it is a likely recipient of “patient
capital.”
The influx of mainstream investment with an emphasis in
MFIs, Health Care, Agri-business, and Clean Energy bodes
well for regions with established infrastructure and strong
human capital capacity, indicating further investments and
exits in such regions. Also, there are significant efforts from
Government and Government-related agencies to advance
and promote the most need-sensitive areas of India.
Yearly Exits and Corresponding IRR:
After 2010, the Indian impact investing space has
consistently witnessed over nine exits a year. This figure is
poised to grow with five exits already completed through
March 2015. Given an average investment horizon of 4.3
years, and the increased activity over the past five, it is
reasonable to assume more exits will be executed in the
near future. This is an exciting prospect, as noteworthy
exits are one of few constraints impeding massive
expansion of industry movement. The spike in median IRR
and median exit multiples in 2010 can be attributed to the
blockbuster SKS IPO, with KISMET realizing a highly
profitable return. The same year also recognized exits from
a mix of commercial and impact investors in Equitas
Holdings and Spandana Sphoorty Financial, netting
significant exit multiple and IRR figures. With Microfinance
and Financial Services dominating over the impact investing
space, the AP Microfinance crisis in 2011 could have
crippled the market. However, 2011 became the redefining
year in the impact space, characterized by significant exits
in other impact sectors; four exits in Education, two in
healthcare, and two in Renewable Energy. Instead of
collapsing, the market pivoted and diversified, limiting the
dependence on microfinance and financial service
enterprises.

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The median IRR and exit multiple across all 55 analyzed exits
is 27% and 2.25x respectively. This historical performance
provides a convincing foundation for confidence and future
investments. Note, exits in 2005 and 2006 are removed
from the data set as Citi’s exit from Suzlon Energy
represents the only exit for the year and is an outlier,
yielding an IRR and exit multiple of 333% and 48.72x
respectively.
Exit Multiples and IRR by Sector:
Unsurprisingly, the most successful sectors in the Indian
impact investing space are Financial Services and
Microfinance. Representing 22 of the 56 exit sample size,
Microfinance has demonstrated a median exit multiple of
3.55x and a median IRR of 39%, while Financial Services
realized 7.50x and 27% respectively. Thirteen of the 17
Microfinance exits occurred after the crisis in Andhra
Pradesh in 2010. These exits are noted by a longer than
average holding period, indicating investor patience. The
Healthcare & Life Sciences sector is consistent, with exit
multiple and IRR figures hovering around the median
market return. Education is noted by volatility, with IRRs
ranging from -36% to 249% and exit multiples ranging from
0.41x to 58.49x. Five of the 12 exits in Education generated
negative IRRs. Agri-business investors have performed well
despite the limited deal volume. Renewable Energy has
generated modest returns, with strong exit volume.
Sector diversification and expansion is a priority to
investors, with portfolio allocation shifting and increasing
across Energy, Agriculture, Healthcare, and Education2
.
Leading exits in companies such as Green Infra (IDFC PE),
Milk Mantra (Aavhiskaar), Eye-Q (Song Advisors), and
Educomp (Gaja Capital) demonstrate the immense financial
potential of these growing sectors.
Exit Types by Sector:
Secondary sales are well represented as a percentage of
total exit value across all sectors. The infancy of the market,
risk stemming from extraneous political and economic
factors, and unproven emphasis on social intentions limit
the exit options for early and growth stage investors. While
profitable secondary sales currently flourish, general
market confidence will increase leading to more IPO exits in
the near future, especially in Microfinance and Financial
Services sectors. IPO exits are marked by high exit value and
low volume across all sectors, but are particularly high in
both parameters in the education and energy sector. The
education sector in India is marked by large
players such as Educomp and Everonn Education
who experienced astronomical rises and large
IPOs, but later faced drastic declines in stock
price. Considering the early stage of affordable
healthcare and financial services, no IPO exits
occurred during the consideration period.
Despite the lack of IPO exits, healthcare has
garnered a significant amount of secondary
interests from investors. A limited number of
strategic sale and buyback exits have occurred in
exit value and volume. Strategic sales have had
modest success, with a median exit multiple and
IRR of 1.26x and 16.4%, while buybacks have not
demonstrated viable returns, with 0.99x and -
0.2% respectively.

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Commercial vs Impact Investors:
A total of US $1.66 billion in exit proceeds from 2005 to
2015 have been distributed across commercial and impact
investors. From this amount, we have removed two
outlying commercial exits in Suzlon Energy to give a more
accurate depiction of the proportion of impact and
commercial exit values. These 2006 and 2009, IPO exits by
Citigroup Venture and Chryscapital contributed over $921
million of the total $1.66 billion pool. After removing these
two exits from the data set, exits from impact investors
account for only 10% of the remaining pool value.
Commercial investors have an aggregate entry investment
of $243 million spread across 37 commercial investors, and
impact investors have an aggregate entry investment
amount of $37 million spread across 25 impact investors.
Commercial investor exits are defined by marquee IPO
exits. Chryscapital and Citi Venture netted a combined exit
of over $921 million, while commercial investor exits in PI
Industries, SKS Microfinance, Educomp, Green Infra, and
Tree House Education IPOs resulted in a combined exit
amount of $285 million. The highest valued exit for an
impact investor operated in the Microfinance sector, with
Creation Investments receiving over $14 million in the
secondary sale of Grameen Koota. Twenty of the 25 impact
investor exits were secondary sales. This presents a clear
demarcation in the stage of invested companies at the time
of exit as well as the difference in investment thesis of
commercial and impact investors. Impact investors have
outperformed commercial investors with the median IRR
exceeding those observed by commercial investors,
benefiting from being pioneers in the growing Indian impact
space.
Investment Holding Period on IRR:
Arranging the exits by gestation period attempts to define
a trend between investment horizon and IRR. Causation is
not readily apparent as mutlple variables need to be
considered while broadly categorizing an input on
subsequent IRRs. That being said, investments held for two
to three years before exiting have performed better than
their peers, with exits occuring from the second to thrid
year of entry observing a median IRR of 50% and the third
to fourth year window yielding a median IRR of 37%. The
median IRR for all exits is 27%, with the width of each exit
year spanning a 5% confidence interval above and below
the corresponding median. There is an even sector
distribution across all exit horizons as well as a mix across
commercial and impact investors.
Exits occuring within the second and fifth year are the most
volatile with a standard deviation of 111% and 107%
respectively. Most of the negative IRR exits (Speakwell,
Veta, and HHV Solar) occurred within the four to six year
holding period. Holdings of six to seven, and 7+ years have
performed well. A majority of exits within this timeframe
are from mature stage enterprises, primarily in the
Microfinance and Financial Services sectors. Notable exits
include SKS Microfinance, Basix, Janalakshmi Financial
Serices, and Excelsoft Technologies. Short term as well as
long term exits have performed well in the Indian impact
space.
Returns across Exit Type:
A majority of exits observed from 2005 to 2015 are
secondary sales, with exits typically taking place during the
growth phase of the investee. Secondary sales have yielded
strong exit multiples and IRRs, both exceeding the sample

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size median. Exits via IPO have demonstrated the highest
potential for return with only two exits resulting in a
negative multiple and IRR (2i Capital in XL Energy and New
Vernon in Everonn Education). An IPO is considered the
ideal exit path for any investor, with the exit outcomes
validating this claim. Despite this, the growing debate
about the moral effectiveness of commercial means in
social enterprises should be discussed. As more aggressive
investors enter the market, and a wider understanding of
the opportunities present in the Indian impact investing
space grows, impact measurement and regulatory practices
will be essential in developing and protecting the integrity
of the market’s mission3
. Strategic sale exits have yielded
modest returns, led by Navneet Publication’s purchase of K-
12 Techno Services from Song Advisors, generating a 66%
IRR for Song Advisors, and Davita’s equity share purchase of
Express Clinics from Somerset Indus Capital Partners,
generating a multiple of 2.4x and IRR of 40%. Increasingly,
more international players have begun to look at India for
acquisitions within their domain, highlighting the
importance of the strategic sale as a key exit strategy in the
future. Buybacks have historically been the least effective
exit type, as this exit type is associated with low investee
performance.
Exit Stage and IRR:
Out of the data set, 33 exits occurred during the investee’s
growth phase, 22 during the mature phase, and nine in the
early phase. Impact investors historically are the first
movers in the space, with a majority of early and growth
stage funding and exits. Investors have reaped the benefits
of early stage risk as early stage exit IRRs outperformed
growth stage. The greatest IRRs were received after proof
of concept and scale with mature exits garnering high
selling prices, and a median IRR of 39%. Average investor
time horizon can loosely speak to the intentions and risks
apparent at each stage. Early exits were held for an average
of 3.3 years, while growth and mature exits were held for
4.1 and 5.0 respectively.
Primary and Secondary vs. Secondary Exits
A majority of exits, 67%, result in only the exchange of
equity shares from one PE/VC investor to the next. These
exits have lower exit multiples and IRRs than exits involving
primary and secondary transactions. As multiples and IRRs
can be directly linked to investee performance, the more
favorable a return, the more likely the new investor is to
infuse equity in the company along with the purchase of
shares from the existing investor. This also speaks to the
potential growth of an investee. Seventy-two percent of
transactions with primary and secondary components
occur during the investee’s early and growth phase,
compared to 63% of secondary transactions.

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Microfinance:
The success of the Indian microfinance sector catalyzed the
evolution of impact investing, with substantial investor
returns sparking the capital potential of all sectors. With a
median exit multiple and IRR of 3.55x and 37% respectively,
despite the Andhra Pradesh microfinance crisis, MFIs
continue to rebound and generate consistently strong
returns for investors. Analyzing the Compound Annual
Growth Rate (CAGR) growth of the gross loan portfolios,
there is a clear correlation between the rate of growth on
the subsequent exit multiple and IRR. GLP CAGR growth
greater than 100% yield significant stronger investor
returns than growth between 50-100% and less than 50%.
This correlation, while intuitive, is not completely depicted
in the findings, as the microfinance crisis crushed and
slowed the growth of GLP figures, but patient investors
made profitable exits. The GLP CAGR less than 50% bucket’s
stronger IRR and exit multiple performance is attributed to
two exits for SKS Microfinance, as investors invested at a
very early stage in the company and exited at the IPO/post-
IPO stage. The median CAGR for the increase of female
borrowers is 68% and the median CAGR for revenue is 85%.
The increase in access to financial services and focus on
women empowerment has changed the landscape of India.
Equitas Holdings illustrates the benefits a strong performing
MFI can produce with effectively managed capital infusions.
Kalapthi Investments and Aavishkaar Goodwell’s exits
observed an increase in Equitas Holdings’ GLP of 428% and
343% respectively, an increase in female borrowers of 582%
and 457% respectively, and an increase in revenue of 928%
and 704% respectively.

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Case Study 1: SKS Microfinance
SKS Microfinance was founded in 1997 by Vikram Akula.
Formed as an NGO in December 1997, SKS began
operations in 1998 in Tumnoor village of Andhra Pradesh.
SKS Microfinance Private Limited was registered as a non-
banking financial institution (non-deposit taking NBFC) with
the Reserve Bank of India on 20th January, 2005 and
pivoted from a non-profit organization to a for-profit
organization. In 2010, it became the first MFI in South Asia
to launch an IPO and get listed.
SKS Microfinance has diversified its lenders among public
and private sector domestic banks, private sector foreign
banks, and institutional investors. Today, SKS has banking
relationship with over 45 banks and financial institutions.
Vinod Khosla, SIDBI, Bajaj Allianz, Yatish Trading, Kismet
Capital, Sandstone Capital, and Silicon Valley Bank are
among the existing equity partners of SKS Microfinance.
SKS is a publicly listed company on the NSE as well as the
BSE with a total market capitalization of about Rs 5900 cr
(as on 1st
June 2015). Foreign Institutional Investors (FIIs)
own 44.72% stake in SKS and the total public shareholding
in SKS is 90.73%. SKS reported Rs 87.66 cr as Profit after Tax
and Rs 803.06 cr as Total Revenues for FY 2014-15.
Pre-IPO:
• SKS Microfinance expanded its membership from 200k
in five States to 4 million in 18 states from FY’06 to FY
’09, branches also expanded from 80 to 1,353 during
this period
• The gross loan portfolio increased at a CAGR of 162.9%
from Rs 780 million as of March 31, 2006 to Rs 14,175
million as of March 31, 2009, and further increased to
Rs. 28,000 million as of September 30, 2009
• Over the three year period from FY '06 to FY '09, profit
after tax increased at a CAGR of 265.2%, from Rs. 16.47
million to Rs. 801.96 million
IPO:
• SKS Microfinance issued shares at the upper price band
of Rs 985 and raised Rs 16,500 million at a P/BV of 6.68
and P/E of 36.3, its IPO was oversubscribed by about 13
times
• It recorded listing day gains of 10% on its debut on 16th
August 2010 and a month later its share price rose by
about 51%
Andhra Pradesh Crisis:
• SKS plunged into crisis after the Andhra Pradesh MFI
ordinance was passed in October 2010 as AP accounted
for 30% of its loan portfolio
• It had to write off Rs 1,300 cr as the collection of
receivables fell from 99% to 11.5% and it lost almost
81% of its value as the share price dropped from Rs
1,402 on 28th
Sept 2010 to Rs 271 on 9th
May 2011.
• SKS recovered from the crisis by reducing its AP
portfolio, optimizing its cost structure, improving cash
flow management and raising fresh capital
Present:
• SKS has reported a 47% YoY growth in their Non-AP
Gross Loan Portfolio, totalling Rs 4,171 cr in FY 2015,
and reported PAT of Rs 187.7 cr for FY 2015, observing
169% YoY growth in PAT over FY2014
• It has made a durable foundation for sustainable
growth by regaining its market share from 8% in
June'12 to 10% as of Dec '14, upgrading its technology
and reinforcing capital base by raising Rs. 398cr through
a QIP in May '14
Exit during IPO: Sequoia Capital India II and Mauritius Unitus
Corporation initially invested in March 2007, and partially
exited SKS Microfinance through the IPO in August 2010.
Receiving tremendous return, the exit was marked by a
multiple of 18.11x and an IRR of 135.53% (First-in First-out
basis).
The recent QIP offering in May 2014 received commitments
from CLSA, IDFC, Credit Suisse, Macquarie, ICICI Mutual

13. July, 2015
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Fund, Amansa Capital and Morgan Stanley, raising Rs 398 cr
at an issue price of Rs 225. The mark-to-market IRR for
these investors is about 105% as of 1st
June 2015 with a
multiple of 2.04x.
SKS was touted as the ideal impact investment with the Pre-
IPO boom and IPO generating stellar exits and remarkable
growth. Unfortunately given its high leverage in Andhra
Pradesh, the AP crises toppled portfolio performance. By
diversifying their geographic operations, implementing risk
controls, and improving cash flow management, SKS began
the path to recovery and regained market share. With
improved performance and demonstrable growth from
2012 onwards, SKS is proving their resilience and the
renewed opportunity for investor returns.

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Case Study 2: Milk Mantra Dairy Pvt. Ltd
Milk Mantra Dairy Private Limited was founded in August
2009 by Mr. Srikumar Misra with the conscious capitalist
objective of building an innovative dairy products business
with the latest technology, whilst creating sustainable
impact among farmers. The company produces a range of
dairy products like milk, probiotic dahi, paneer, lassi and
buttermilk under the ‘Milky Moo’ brand, from its state of
the art processing plant situated at Gop, Odisha. Milk
Mantra is one of the very few private dairy brands
operating in the region. Recently, the company has also
launched a functional milkshake under the brand
‘MooShake’ across the major metros in India.
Milk Mantra has a structured Ethical Milk Sourcing
programme through which it collects the highest quality
milk from a network of more than 40,000 farmers covering
more than 500 villages. Milk Mantra uses innovative
technology in processing and packaging for its products and
has positioned itself as a premium and innovative dairy
brand. It currently sells its core dairy products in Odisha,
Kolkata and key markets in Jharkhand and Chhattisgarh.
Milk Mantra received its first round of funding from a set of
angels (including Mumbai Angels and a few NRIs) back in
November 2010 when its state-of-the art plant was still
under construction (first Tetra Pak plant in the eastern
region). The angels together invested close to INR 5 crores
in the company. This was soon followed by institutional
funding from Aavishkaar I in January 2011 where the
primary infusion was INR 4 crores (Series A). At that time,
Milk Mantra was one of the few companies to receive
institutional funding at a pre-revenue stage. Milk Mantra
also received debt assistance from IDBI Bank for setting up
its dairy plant, which commenced operations in Jan 2012.
Within twelve months of commencing its operations, Milk
Mantra raised a second round of institutional funding from
Aavishakaar as a follow-on round in December 2012 where
the company received INR 10 crores. Milk Mantra planned
to use these funds to strengthen its sales channel and to
expand to other states in the geography. The products then
sold included high quality milk, curd and paneer. As a result,
Milk Mantra expanded aggressively resulting in 365%
growth in revenue for FY2012-13.
During FY2013-14, Milk Mantra further strengthened its
product portfolio by adding lassi and buttermilk, thereby
increasing the proportion of value-added products. It
further clocked a 140% growth in revenue during that year
and in order to fuel further growth raised Series C round of
INR 50 crore primary infusion in June 2014 led by Fidelity
with Aavishkaar’s participation. This round valued Milk
Mantra at the best valuation multiple in the dairy space,
validating the potential offered by eastern geography and
presence of a premium brand. The primary infusion came in
two equal tranches. The funds were utilized to expand
capacity of its current plant, acquire a plant in western
Odisha, enter new markets and launch functional milkshake
across India. This round also saw Aavishkaar I and most of
the angels making an exit from their investment.
In terms of exit, the angels (on an average) made an IRR of
36.5% with an exit multiple of 3.05x for their investment in
Milk Mantra. Aavishkaar I reaped a good IRR of 38.6% with
a similar multiple and made a complete exit while the other
Aavishkaar fund stays invested in the company. Milk Mantra
has set a great example, where an impact-focused entity
has been able to raise capital at a very early stage and has
scaled up in an aggressive and responsible way to provide
handsome return to its investors. Milk Mantra is one of the
great success stories for non-MFI/ non-financial inclusion
companies in the impact space and is on the right trajectory
to achieve greater successes in the near future. It further
proves that the impact space is not short of exits, provided
there are quality organizations and visionary promoters.

15. July, 2015
Page | 14
Conclusion
Through the analysis of 64 exits, 56 of which have complete
exit data figures, we have identified trends over impact
investing space in India over the past ten years.
 A majority of investor activity and exits have
happened in Southern India, due to the presence of
strong entrepreneurs, a relatively developed
ecosystem, and the consequent investor attention
 The microfinance crises was a catalyst for
diversification, with portfolios expanding to other
sectors
 Exit deal volume has been consistently strong post
2010
 Median IRR and exit multiple demonstrate strong
returns at 27% and 2.25x respectively
 Microfinance and Financial Services represent 22 of
the 56 analyzed exits and have been the strongest
performing sectors
 Exits across Education, Renewable Energy, and
Healthcare are well represented with consistent
returns
 IPOs have proven to be the most profitable exit
strategy across the Agri-business, Education,
Microfinance, and Renewable Energy sectors
 Secondary sales are the most common exit avenue,
and strategic sales are poised to increase
 Commercial investors have realized over 90% of all
exit value, while impact investors have reaped
higher IRRs
 Holding periods of two to four years have
outperformed the sample size median IRR, and
exits held for six plus years are traditionally
successful exits in Microfinance and Financial
Service enterprises
 Impact investors exit enterprises during early and
growth phases while commercial investors exit
during growth and mature phases
 Mature phase exits generate significant returns
with a median IRR of 39%
 Return metrics are contingent on investee
performance, with higher returns yielding more
primary and secondary purchases and lower
returns yielding predominantly secondary
purchases
 The rate of Microfinance GLP CAGR growth can be
correlated to exit multiple and IRR, with greater
growth leading to greater returns
Given the nascence of the impact space, these trends are
subject to change as more impact enterprises reach
maturity and provide substantial returns through public
offerings and strategic sales. We have offered a data subset
that should spark investor confidence, and validate the
impact investing methodology, proving social impact and
financial return can not only coexist, but lead to significant
investor gains.

16. Sources in order presented:
1. Intellecap. (2014). Invest. Catalyze. Mainstream. The Indian Impact Investing Story.
2. GIIN. (2015). The Landscape for Impact Investing in South Asia.
3. Whalan, H. (2014, March 28). Three Factors That Show Social Enterprise Might Start Seeing Bigger Exits.
Retrieved from www.fasctcoexist.com.
4. J.P. Morgan. (2015). Eyes on the Horizon: The Impact Investor Survey.