Nuveen: Evaluating a Private Equity Impact Investment
For five years, the private equity impact team at Nuveen led by Rekha Unnithan, CFA, had been watching Samunnati, a specialized agriculture value chain solutions provider located in Chennai, near the southeastern coast of India. Its mission was to support smallholder farmers, who comprised roughly 87 percent of Indian farm workers, by providing financing and capacity building for farmer collectives and larger, more diverse agri-enterprises. Through market linkages and working capital, Samunnati sought to raise the access, purchasing power, and connectivity for agricultural value chains in India. Launched and led by a career banker with deep expertise in rural and agricultural finance, Samunnati was poised to transform the agriculture ecosystem in India while improving the income and livelihoods of hundreds of millions of smallholder farmers.
First introduced to Samunnati in 2014, the Nuveen team had followed the company’s journey from a pilot project in the unbanked tiers of a single state in India to an agritech enterprise operating in 14 states and over 30 value chains across India. In early 2019, Samunnati began raising its Series D round of financing to further its growth, and the team at Nuveen was ready to take a closer look. Despite Samunnati’s success to date, agriculture had historically been a risky sector with significant volatility, particularly at the value chain level. In addition, the company was in its growth stage, so its systems and processes needed to further mature—specifically its information technology strategy, impact framework and reporting, and preparations as a Systemically Important Non-Bank Finance Company, a designation assigned to Samunnati given its size and significance in the economy. Finally, given the marginalization of smallholder farmers throughout history, the Nuveen team was sensitive about safeguarding this vulnerable member of the agricultural ecosystem; specifically, they wanted to ensure that the investment would not exacerbate indebtedness in the farming sector—a critical component of the overall economy and food system. The team had a lot to consider—while Samunnati’s financial prospects were robust, Nuveen was laser-focused on creating a “more inclusive world” and a “just climate transition.” Evaluating the investment would not be a simple exercise.