Karandaaz Capital

Karandaaz Capital is the small and medium size enterprise (SME) investment platform of Karandaaz Pakistan, managing a portfolio of USD 50 million in capital committed by the United Kingdom Department for International Development (DFID) to deepen capital access for SMEs in Pakistan. Karandaaz Capital invests commercially directed capital through a wholesale Credit business and direct Corporate Investment private equity platform, to generate broad based employment in Pakistan and financial returns for the Company.

Supply Chain Finance

Following extensive industry consultation, Karandaaz Pakistan has developed a Supply Chain Finance Program designed to leverage the information and influence of professional corporates managing deep supply chains, and the financing and distribution capacity of commercial financial institutions, to provide large scale term and working capital finance to SMEs embedded in organized supply chains of the economy. Under the Program, Partner Corporates direct Partner Financial Institutions to strategic vendors and distributors, and assist in validating and ring fencing cash flows and penalizing delinquent vendors. Partner Financial Institutions provide a minimum 3-4 times the  risk capital provided by Karandaaz; and manage loan origination, underwriting, and servicing. Facilities signed with Meezan Bank Limited and ORIX Leasing Pakistan make available USD 90 million in financing to credit worthy SME suppliers and distributors. For Partner Corporates the Program offers an opportunity to direct term and working capital credit to strategic vendors and distributors without assuming any credit or balance sheet risk or liability.

Corporate Partners

Karandaaz Pakistan and its Partner Financial Institutions have signed on leading corporate partners and continue their business development effort to extend the outreach of the Program:

Credit

The Credit business of Karandaaz Capital designs innovative and viable credit models for SME finance  with premier financial institutions, and invests risk capital alongside its financial partners to help significantly accelerate SME access to finance. Key focus areas of its structured finance programs are to promote term finance for capital investment and place greater emphasis on cash flow based lending. With advances in digitization, the Credit business will seek over time to develop partnerships around fin-tech innovations.

Corporate Investment

The Corporate Investment business of Karandaaz provides growth capital to established SMEs with compelling growth prospects led by reputable and experienced sponsors and management teams. The CI business is seeking to develop a small portfolio of 3-5 investments through equity and equity-linked structures in SMEs with an indicative ticket size of USD 500k to USD 2.5 Million.

In addition, Karandaaz has made a strategic corporate investment of ~USD 22 Million in the Pakistan Microfinance Investment Company Limited (“PMIC”), a commercial credit conduit established to finance and develop capacity of retail microfinance services in Pakistan.

Investment Guidelines

Investment guidelines for Growth Capital investments are based on the following key characteristics:

Company Size:

  • Revenue USD 1 – USD 15 million
  • Ticket size USD 500k – 2.5 million; larger with co-investors

Ownership Stake:

  • 10% to 51% (significant minority, opportunistic control)

Investment Types:

  • Growth Capital (Convertible Debt, Preferred Equity, Common Equity)

Geography:

  • Pakistan as principal place of Assets and Job creation

Industry Criteria:

  • Sound long term growth fundamentals
  • Defensive and not highly cyclical
  • Substantial

Pakistan Microfinance Investment Company

The Pakistan Microfinance Investment Company, a specialized, for-profit wholesale investment finance institution, has been established by the Pakistan Poverty Alleviation Fund (PPAF) and Karandaaz Pakistan through funding from the United Kingdom Department for International Development (DFID) and KfW Development Bank. PMIC is the first publically funded, privately managed, commercial development finance institution dedicated to accelerate the development of microfinance in Pakistan by providing financial services to low-income populations who would otherwise have limited access to banking and other financial services. Microfinance is central to Pakistan’s National Financial Inclusion Strategy (NFIS) launched in May 2015 by the government of Pakistan.

The purpose of PMIC is to provide sustainable funding to retail microfinance banks and nonbank for-profit and nonprofit microfinance providers (“MFIs”), through its own well capitalized balance sheet and via building strong links with commercial credit and capital markets, to support broad based economic and employment growth in Pakistan.

Investment Guidelines

Investment guidelines for Growth Capital investments are based on the following key characteristics:

Company Size:

  • Revenue USD 1 – USD 15 million
  • Ticket size USD 500k – 2.5 million; larger with co-investors

Ownership Stake:

  • 10% to 51% (significant minority, opportunistic control)

Investment Types:

  • Growth Capital (Convertible Debt, Preferred Equity, Common Equity)

Geography:

  • Pakistan as principal place of Assets and Job creation

Industry Criteria:

  • Sound long term growth fundamentals
  • Defensive and not highly cyclical
  • Substantial

Pakistan Microfinance Investment Company

The Pakistan Microfinance Investment Company, a specialized, for-profit wholesale investment finance institution, has been established by the Pakistan Poverty Alleviation Fund (PPAF) and Karandaaz Pakistan through funding from the United Kingdom Department for International Development (DFID) and KfW Development Bank. PMIC is the first publically funded, privately managed, commercial development finance institution dedicated to accelerate the development of microfinance in Pakistan by providing financial services to low-income populations who would otherwise have limited access to banking and other financial services. Microfinance is central to Pakistan’s National Financial Inclusion Strategy (NFIS) launched in May 2015 by the government of Pakistan.

The purpose of PMIC is to provide sustainable funding to retail microfinance banks and nonbank for-profit and nonprofit microfinance providers (“MFIs”), through its own well capitalized balance sheet and via building strong links with commercial credit and capital markets, to support broad based economic and employment growth in Pakistan.

Corporate Investment

The Corporate Investment business of Karandaaz provides growth capital to established SMEs with compelling growth prospects led by reputable and experienced sponsors and management teams. The CI business is seeking to develop a small portfolio of 3-5 investments through equity and equity-linked structures in SMEs with an indicative ticket size of USD 500k to USD 2.5 Million.

In addition, Karandaaz has made a strategic corporate investment of ~USD 22 Million in the Pakistan Microfinance Investment Company Limited (“PMIC”), a commercial credit conduit established to finance and develop capacity of retail microfinance services in Pakistan.