Washington, March 30, 2015
—IFC, a member of the World Bank Group, has committed up to $200 million to the IFC Financial Institutions Growth Fund (FIG Fund). The FIG Fund’s mandate is to make equity investments alongside IFC in growing emerging market financial institutions, supporting private sector development by increasing much needed access to finance for small and medium enterprises in those markets.
IFC will commit $150 million to the first close, which together with other investors will bring the first close of the fund to approximately $345 million. Three of these investors have additional commitments totaling approximately $105 million for subsequent closings of the fund. IFC is joined by the State Administration of Foreign Exchange of China, the Japan Bank for International Cooperation, and the Hungarian Export-Import Bank, Plc. The fund will provide a platform for mobilization of private capital into emerging markets, enhancing and expanding IFC’s reach and development impact.
As a result of the growing economies, there is a larger need for equity capital by financial institutions in emerging markets. However, most institutions face significant challenges raising capital due to perceptions of system risk, funding constraints and changing regulatory environments. In order to address this gap in funding, there is an increasing opportunity for alternative vehicles like private equity funds to mobilize resources into sustainable businesses in emerging markets. Equity investments in quality financial institutions can also help further strengthen local financial systems against the risk of future potential crises. In parallel, equity these investments provide the potential for attractive financial returns as a result of strong economic growth, a dynamic and growing middle class and increasing financial services penetration in these countries.
“Global and local financial institutions increasingly need more capital to keep up with the rapid growth of economies in emerging markets, and to finance expansion opportunities to remain competitive,” said Jin-Yong Cai, IFC EVP and CEO. “This fund will support these institutions with core capital, helping promote economic growth and development while aiming to achieve strong returns.”
The fund will provide investors with access to IFC’s pipeline of investment opportunities and will develop a diversified portfolio of financial institutions in emerging markets. IFC’s committed portfolio in financial institutions totaled more than $24 billion as of the end of FY2014, enabling it to increase access to finance for small and medium enterprises and entrepreneurs.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, we provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development. For more information, visit
www.ifc.org
