Tasked with penning the first blog of UC Inclusive Credit is certainly an unprecedented responsibility. The important thing to remember, however, about doing “firsts” is that because there is no precedence, there is no downside. So, hence with great aplomb I begin this attempt.
Given this enviable task, I will try my hand at writing something that I am most comfortable with – the story of “Unitus Capital” (UC) and UC Inclusive Credit. It’s a quick ready reckoner on the Unitus’ history, so most of it is created out of my personal interactions over the years with the founders and colleagues of Unitus.
It was in 1999 when certain like minded individuals from US and Europe with wealth and intent got together to make an intervention into poverty alleviation. These included some very renowned names who continue to choose to remain anonymous crusaders in their fight against poverty. During one of their brain storming sessions, somebody suggested that they should probably go and meet some guy in Bangladesh who was working in the area of micro credit. The “some guy” was Prof. Mohd. Younus who created Grameen Bank – World’s largest financial inclusion program. Now, I don’t know the exact number of days or what advice Prof. Younus gave but what I do know for a fact is that post the visit, “Unitus” happened.
Unitus was born in the year 2000 in Seattle as a not-for-profit global institution with a clear mission to creating “Innovative solutions to solving poverty”. Given the inspiration from Grameen Bank, Unitus focused on helping commercialize and scale microfinance institutions (MFIs). To remove the ambiguity once and for all on what exactly “Unitus” means, it is basically unison of two words – “Unite” and “Us”. The idea was to “Unite” the “haves” with the “have nots” and create “Us”. Hence the word “Unitus”. The focus of Unitus was to work with “partner MFIs” and provide them with “free” consultancy in the areas of accounts and finance, human resource, Information technology and operations. Overtime, Unitus would have offices in Africa, India and the US, with India being their largest market.
Unitus Capital – idea, struggle, recognition and…the idea again
“Unitus” in its journey of nearly two decades, has innovated, transformed and become an incubator. This journey, reminiscent of a meandering river, has given the impact sector many a world-class institution – Elevar equity fund (earlier known as Unitus equity fund), Unitus Capital, Patamar Capital (earlier known as Unitus Livelihood fund), Unitus Ventures (earlier known as Unitus Seed Fund) and Capria, as well as many other institutions grown by ex-Unitus employees.
During the early days of working with partner MFIs, it was realised that most of them do not understand the process of fund raising – be it debt or equity, and they needed significant handholding. To address this gap, Unitus Capital was formally launched in 2008 with the objective to raise equity and debt capital for impactful businesses. However, as fate would have it, the global financial crisis loomed large over the initial stages of incubation of this novel idea. Having withstood the storm for a couple of years, it finally felt like the time had come for real expansion. Unitus Capital in the year 2010 made its first big recruitment drive (which included yours truly). Barely a year had passed and the operations met with another massive setback – the microfinance ordinance in Andhra Pradesh which brought microfinance operations to a standstill. At that time, almost 100% of Unitus Capital’s advisory work comprised of microfinance. Capital raising came to a standstill in the sector as almost no investor or lender was willing to proceed with partnering with MFIs. This was a major setback and set Unitus Capital on a path of course correction and sector diversification. Unitus Capital started to focus on other impactful companies in the areas of financial inclusion, education, health, agriculture, cleantech, livelihood creation and women empowerment. The strategy bore fruit because post the recovery from the microfinance crisis Unitus Capital had multiple assignments from a diversified client base. It also started competing in the annual rankings of Indian investment banks, and has been ranked as the No.1 Investment Bank in India (in terms of number of deals) by Venture Intelligence each year since 2013. During this time, Unitus Capital has raised over $2.5 billion for various impact businesses (and counting).
While, all the Unitus institutions are addressing some gap or the other that exists for impactful companies, they are all still focussed on only equity. Unitus Capital, in its work as an advisory firm, also arranges debt for social enterprises. During this work, it was felt that the demand for debt outstripped the supply of it given that the debt market was still dominated by conventional modes of credit assessment which doesn’t truly understand impact businesses, leave alone extending credit. Moreover, the demand for debt came in unique structures that were not amenable to many lenders.
It was in 2015, during Unitus Capital’s annual off site that the idea of a credit business finally took roots. It was decided that Unitus Capital will incubate a regulated lending institution focused on supporting impactful businesses in India. But that’s just very simply putting across what we want UC Inclusive Credit, or UCIC as we call it now, to do.
UC Inclusive Credit – The journey thus far and road ahead
UC Inclusive Credit was officially born on 17th of June, 2016. Subsequent hoops of RBI registration and other approvals took their usual time, and we formally opened for business on 15th February, 2019. It has taken a bit more time than we had anticipated, but during this interim period we were able to see off two more macro economic events that shook up the economy – demonetisation and the implementation of GST. People say that you are generally lucky the third time round, but it was reverse in the case of UC Inclusive Credit. When we opened for business we found ourselves bang in the middle of a Banking and Financial Sector crisis wherein funding is now coming at a premium. But there is never a prefect start, and given UC’s legacy we have always found a way to survive and prosper.
The road ahead for UC Inclusive is exciting and promising. We strongly believe that UC Inclusive Credit’s intervention in our target segment is critical for the impact sector to grow and create inspirational stories. Our endeavour will always be to put the clients first, and by clients we mean the millions of have-nots who are in need of the products and services that our borrowers provide. We look forward to collaborating with a number of these innovative, technology-enabled impact businesses through innovative debt structures and try our best to ensure that they are not starved of capital.
Exciting times ahead!
Meanwhile, there will be more interesting experiences to share from UCIC that should throw some insights into who we are and what we do. Keep visiting our pages!