India’s economic growth surge has teed up an enormous transfer of wealth. The country’s wealthiest families are set to pass on some $1.4 trillion to the next generation over the next five to 10 years.
In a country where few families have embraced impact investing, Leena Dandekar and her children’s are modeling how to marry investment growth and family values.
The Dandekars are part of the family behind Camlin Group, a major art and stationery supplier in India. About eight years ago, she and her two children Abha and Vivek Dandekar sold their shares in the family business and used the proceeds to set up the Raintree Family Office.
“Everything we owned was an investible corpus at that point of time. We did not have any running businesses. It was just money, to be invested,” Leena Dandekar tells ImpactAlpha.
Their wealth was sufficient for them, she says, so they sought to use the family office as a vehicle for investing purposefully. “How do we use it to drive a change?”
The Dandekars allocated a third of their investment portfolio for impact investments with a plan of increasing that share over time.
“We would like the third to go up to 50% or 60%,” says Dandekar.
Impact investing skepticism
India’s wealthiest family businesses have amassed around $1.6 trillion in value. Exits like the Dandekars’ from legacy family businesses, and the need to pass on wealth to the next generations, have led many wealthy families in India to set up family offices. They number about 300 in India today now, according to one estimate.
Prominent names include Premji Invest of Azim Premji, whose wealth comes from the information technology giant Wipro and the family offices of automaker Mahindra, the consumer goods families Godrej and Burman.
Most wealthy families don’t look at their investments as a tool to make a difference in society, however. For that, they typically opt for the traditional charity route, donating to causes they care about through family foundations. Family offices are reserved for preserving and growing wealth through traditional investment portfolios.
“For many, impact investing appears to remain in an experimental phase,” finds a recent report by Delhi-based Impact Investors Council and Waterfield Advisors, a multi-family office and wealth advisory firm.
When the Dandekar family began exploring impact investing, Leena’s children pressed for a focus on climate action. They live in Mumbai which is ranked among the world’s most polluted cities.
Raintree Family Office committed a third of the family’s wealth at the time – around 1.2 billion rupees ($13 million) – to businesses and ideas focused on responsible consumption, circularity and sustainable tech solutions.
“We have flexibility to go as deep and long-term as we want in solving problems,” says Dandekar.
The family also set up the Raintree Foundation for philanthropic climate action.
Recycling impact capital
The Dandekars invest directly in the businesses and solutions that interest them. They have an in-house team that analyzes potential investments. They capped the early portfolio at seven to eight investments to make it manageable for a small team. That in turn means writing checks of $1 million to $7 million for growth-stage businesses rather than early-stage.
“You need maturity in a business to be able to take that ticket size,” says Dandekar.
Its portfolio includes Proklean, a startup that uses consortium bacteria to replace chemicals in textile, leather and other industries. The family made a $4 million investment in 2023.
They have also invested in Smart Joules, an energy assessment and retrofitting company that helps businesses curb energy waste, and Sedemac, an engineering company which makes products that improve fuel efficiency and reduce emissions.
Raintree family office has also notched several exits and is evaluating new investments, including a biogas business.
Dandekar says the family is aiming for about a 15% return on their impact portfolio. The goal is to grow the impact portfolio with a moderate risk profile and reinvest in other impact projects.
“It should be like a revolving fund,” she says.
The family has opted not to invest in funds because most climate impact funds they identified were too early-stage or lacked the track record they wanted to see.
“If you decide to back early-stage then you’re doing extreme speculation,” says Dandekar, which felt too risky for the family.
Systemic shifts
The Dandekars’ journey into impact investment began with a list of where not to invest the family money. They immediately ruled out silver and gold – traditionally popular investments in India – because the family wanted to avoid extractive industries.
They then scanned for positive environmental, social and governance, or ESG, factors, and invested in a fund of funds that tracks with the World Bank’s ESG norms.
“But ‘do no harm’ is not good enough,” says Dandekar. Wealthy families like hers, she says “have the power to actually drive change.”
With its early impact portfolio underway, the family is beginning to look at investment opportunities outside of India. The family wants geographical diversification, but also for exposure to green sectors that are less established in India, like green logistics, Dandekar says.
Meanwhile, with the Raintree Foundation, the family supports climate initiatives that don’t fit its investment model. It’s funding a landscape restoration project in India’s Western Ghats mountain range, for example, where the work involves helping restore water security and biodiversity. It’s expected to be a 10 to 20 year initiative, Dandekar says.
The foundation is also supporting capacity development for local communities to steward the restored landscape and build more resilient livelihoods from the land, especially for women.
The Dandekars commit at least $1 million each year to the foundation and are now looking to work with other donors to incubate local small enterprises in these climate-affected regions.
“There is a possibility to embed for-profit inside the non-for-profit as well,” says Dandekar.
The Dandekars’ see such a mix of capital as necessary to addressing the climate crisis; philanthropy alone isn’t enough when whole economic systems need a reset, says Leena. “We want to influence industries and economic measures.”
