British International Investment (BII), the UK’s development finance institution and impact investor has a portfolio value in India of nearly $2.2 billion across 292 companies. The fund is focused on investing in themes around climate transition and financial inclusion.

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In an interview with CNBC-TV18, Nick O’Donohoe, chief executive officer of British International Investment said, "Whatever line you draw India has the highest number of people below the poverty line in the world." This makes the impact investing theme critical for India.

BII prioritises investments in businesses that drive inclusion which creates new opportunities to engage and improve the underserved sections of society to get access to quality, affordable services like health, and education.

Some of the portfolio companies include the MSME, microfinance lenders, affordable housing finance like Veritas, Shubham Housing Development Finance Company, and Utkarsh Small Finance Bank.

BII is of the view that women in India remain underserved by the financial sector, as one in every five women in the country lacks access to a bank account.

A 2022 survey by BII investee, Indifi Technologies, highlighted that women-led businesses face a $158 billion finance gap. It has invested in Kinara Capital which is helping to expand financial inclusion to MSMEs including increasing women’s access to finance with plans to grow 5x by 2025 and reach 200,000 MSMEs in over 100 cities.

Agriculture and dairy farming are also areas of interest for investments by British International Investment through Cropin & Akshayakalpa Organic, respectively.

Nick said, "We are largely invested in private companies but some of the investee companies have come to the public market, then we strategise to divest them." RBL Bank and IIFL Finance are some of the exits by BII in public market companies.

BII recently invested in M&M’s EV business, Nick said, "Investment done to accelerate their growth in the space." India is still evolving in the adoption of EVs and BII is working with companies across the world to enable infrastructure for EV adoption like battery swapping facilities which are much more cost-efficient.

In terms of energy transition, India is adopting green energy fast but two important themes developing across the world are the innovation of new forms of renewable energy besides, wind, solar, and hydro and the emphasis on transmission infrastructure. Nich said, "Clean energy transmission needs infrastructure investment to distribute it which has been overlooked in many countries."

BII invested over $300 million in climate finance last year including solar solutions, electric vehicles, and sustainable agriculture. This forms part of BII’s commitment to invest up to $1 billion into climate-related projects in India between 2022 and 2026.