Medpro is a healthcare company established on the platform of technology. Health at Home is the managing company of Medpro International. Health care technology is used to provide patients faster, cheaper and more accessible care; generally, outside of a clinical setting. This ranges from general nursing care to critical care for severely ill and long-term, chronically ill patients. It also provides care facilities like counseling, physiotherapy services, monthly prescription-drug delivery etc. The founder’s vision is to aid increasing access to healthcare in Nepal and to serve the current market gap. With Bo2 investment, the founder has been enabled to scale up his business, increase efficiency in providing health care services through a technology platform by adding verticals to further create synergy.
Business Oxygen Private Limited (BO2) is Nepal’s first private-equity fund that has a climate focus. It is a part of the IFC’s Global SME Ventures initiative with investments from the IFC of the World Bank Group, Climate Investment Fund’s (PPCR) and UK Aid’s DFID and is managed by WLC Ventures Pvt. Ltd, a subsidiary of White Lotus Centre Pvt. Ltd. This sector-agnostic fund combines risk capital financing with advisory support to help investee small and medium enterprises develop fundamental financial systems, quality-assurance standards, and corporate governance frameworks.
Can you give an example of who your customer is?
Our customers are entrepreneurs who are looking to raise scale up capital in small and medium enterprises. Access to capital is difficult in Nepal especially if you do not have security to back your loan as collateral. Therefore, PE funds like Bo2 provide that much needed capital in the form of equity along with technical support and assistance for the entrepreneur and his/her enterprise to grow.
How many people work with you?
Bo2 has a team of 10 professionals that has, so far, managed 12 accounts, which directly employ 460 people and have an impact on over 45000 people in the value chain.
The labor market has been difficult to find qualified people lately, do you have this problem?
The biggest problem in Nepal is the out ward migration of the young people. Therefore, this is a continual problem and the SMEs have to struggle to employ and retain qualified people.
What markets do you do best?
We are a sector agnostic fund.
What’s the latest trend in your segment? Are you thinking about expanding into other markets?
PE/VC is a maturing asset class in Nepal. We plan to raise our second fund end of this year that will surpass SME sector and move to larger investments. Having said that, we will continue to cater to the SME sector, as it is very important to develop that sector in markets like Nepal.
Nepal’s future may not be in hydropower, as most assume, but actually in the dung heap. A new industrial-scale biogas plant near Pokhara has proved that livestock and farm waste producing flammable methane gas can replace imported LPG and chemical fertiliser.
Over the past 30 years, Nepal has become a world leader in spreading locally-designed household biogas digesters. There are now 300,000 of them, helping reduce deforestation, improving people’s health and lifting women out of drudgery and poverty.
Now, a company in Pokhara has enlarged household digesters into an industrial scale plant that uses climate-friendly technology that could ultimately be scaled nationwide to reduce Nepal’s balance of trade gap.
Kushal Gurung’s grandfather was in the British Army, and he also applied for recruitment but failed the eyesight test. So, he set up Gandaki Urja in Pokhara that works with wind, solar and hydropower, but he believes Nepal’s best option for sustainable growth lies in energy from waste.
“Nepal must abandon fossil fuels, but even among renewable energy sources biogas has a three-fold advantage. It reduces greenhouse gas emissions, and is therefore climate friendly. It allows us to manage raw waste. And it can slash our import bill for LPG and chemical fertiliser,” says Gurung. “It is a win-win-win.”
A tipper truck has just arrived from Gorkha at Gandaki Urja’s biogas plant at Kotre near Pokhara, which with its dome digester looks like a nuclear reactor. The truck tilts its container to empty 5 tons of smelly poultry waste into a pit where rotting vegetables and cow dung from a farm in Syangja are all being mixed before being fed into the 4,000 cubic meter digester that is kept inflated.
In the absence of oxygen, bacteria already in the cow dung go to work to break down the waste into methane, carbon dioxide and hydrogen sulphide. The impurities are removed by filters to produce 200 cylinders of bio-CNG a day which are sold to big hotels and restaurants in Pokhara.
Customers pay a deposit for the cylinders and pressure regulators, and usually use up about two cylinders a day. The cost per kg for the bio-Compressed Natural Gas (bio-CNG) is the same as the state subsidised Liquified Petroleum Gas (LPG). However, customers prefer the biogas because it saves them up to 30% cost because it has higher calorific value than LPG, and there is no residue that goes waste.
“So far, the customers are satisfied, and we see demand growing in the future as word spreads,” says Ashim Kayastha, Director of Gandaki Urja.
Half the plant’s revenue comes from bio-CNG and the other half from the effluent which is dried and sold as organic fertiliser. The plant can produce up to 11,000 tons of fertiliser a year and is sold to surrounding farms.
The future of bio-CNG depends on scaling up the technology since any municipality generating more than 40 tons of biodegradable waste per day could have its own biogas plant. Nepal imports 500,000 tons of chemical fertiliser a year, and if each of 100 municipalities produced 5,000 tons of organic fertiliser Nepal could slash its import bill.
This could also significantly reduce the country’s annual import of Rs33 billion worth of LPG from India which grew four-fold in the past 10 years, making up 2.5% of Nepal’s total import bill. But to scale up, industrial biogas needs the same government incentives as hydro, solar and wind power.
At the moment hydropower investors enjoy a 100% corporate tax holiday for 10 years, and 50% for the next five years. There is only 1% tax on imports of equipment for solar, wind and hydropower, there is no such provision for the equipment for industrial scale biogas. Instead, there is a tax on interest, and also VAT on bio-CNG.
“The government should look at this not only as an energy project, but at its multifaceted benefits,” says Kushal Gurung of Gandaki Urja. “There is a waste-to-energy and fertiliser angle, too. If we want to make Nepal fully organic in the next ten years, projects like these need to be prioritised.”
Gandaki Urja got a boost from an unlikely source, Business Oxygen (BO2) in Kathmandu which helps entrepreneurs running Small and Medium Enterprises (SMEs) to scale up by injecting equity and providing technical assistance.
Says Siddhant Pandey of BO2: “We are always on the lookout for climate investments, and we realised that bio-CNG would be an incredible adaptive resilience investment. It would displace imports of LPG and fertiliser. It was going to be clean, no carbon footprint, and it made business sense because it met our internal return on investment expectation.”
The challenges are ensuring reliable sources of raw material and building knowhow for the technology within Nepal.
Says Pandey: “The Pokhara plant is a drop in the ocean, it can abe replicated in all 7 provinces. We know it is scalable, and it depends how proactive provincial governments will be.”
BO2 makes a successful second divestment by exiting Le Sherpa Restaurant (P) Ltd., this is the second exit made by an international private equity fund in Nepal.
BO2 has been successful in making its mark in the private equity space in Nepal by making its first exit in July 2019. This is the first successful exit made by an international private equity fund in Nepal. We had invested in Godawari International on April 2017 to help company increase its export of doggy chews, manufactured across several remote villages by several micro diaries in Province 1 of Nepal . At present, Godawari employs 17 direct individuals in its company with women representing 23% of the workforce. Women representation was nil prior to Bo2 investment. Our investment supplemented to support job of 1,750 people employed across 350 micro dairies located in Province 1 and 3 of Nepal and support supplementary income to more than 4,015 small holder farmers who have been supplying milk to these micro dairies. Godawari is one of the few USFDA registered dog chews processing companies in Nepal processing high quality chews.
BAKAS renewable energy will be the nation’s first Biomass pellet producer. This will also mark Bo2’s first investment in Province 2 of Nepal. Bakas renewable energy will utilize 30,000 MT of forest waste reducing forest fire risk to produce ~20,000 MT of Biomass pellets annually. This product will replace thousands of tons of coal imported annually to Nepal and shall foster practice of using sustainable and environment friendly source of fuel in Nepal along with import substitution of coal albeit in small scale
Bo2 has invested in Lakeside Retreat, a hotel founded by a team of tourism professionals who have over 2 decades of experience in the industry. With Bo2 capital, the founders plan to further expand and grow by concentrating on MICE tourism in Pokhara. This marks Bo2’s third investment in Province 4 of Nepal.
This company led by young dynamic group of entrepreneurs is geared to take up an instrumental role in bringing the much-needed facelift to the Nepal’s traditional ‘chalk and talk’ educational methodology in classrooms by assimilating more scientific, logic-based learning approach. The company targets to grow its financials by capitalizing on filling this huge unmet demand by improving the education-practices in Nepal. The company has over in the last 5 years worked with 10,000 students in over 100 schools in the Kathmandu Valley. Karkhana’s entry strategy had primarily, in the beginning, been as an educational service provider to enter the market. Now they are in a position to transition and scale up their position as an educational product cum service provider. Bo2 capital investments in this company will help Karkhana achieve its true potential.
Gandaki Urja is Nepal’s largest commercial scale biogas plant that daily converts 45,000 kgs of organic waste matter into 1,600 kgs of high quality compressed natural gas and 11,000 kgs of organic fertilizer. This replaces imported LPG and chemical fertilizer, making enormous impact to the local economy, alleviating negative balance of payment by substituting import and helping Nepal transition to a sustainable energy future.
The company is owned and managed by a group of young entrepreneurs and energy experts. Bo2 partnership has helped it to lead the market in manufacturing sustainable energy source, with zero net greenhouse emissions, that uses all-natural process, which is called anaerobic digestion to turn waste into clean energy. Gandaki Urja was the recipient of the prestigious international Energy Global award 2020.
The Lakeside Retreat Pvt. Ltd. is a hotel at Fewa lakeside, Pokhara. Established in the year 2012, the hotel has been built in the theme of a resort with a large spacious garden and swimming pool and is conveniently located near restaurants and bars at the lakeside. The hotel is equipped with spa, restaurant and ample parking space. With Bo2 investment, the property plans to increase its rooms, add a conference hall and promote MICE tourism. After expansion, the property will serve more than 19,000 tourists per year in Pokhara, thereby boosting the economy of Nepal and meeting visit Nepal 2020 Goal. 40% of total tourists visiting Nepal visit Pokhara every year.
