WASHINGTON, D.C., April 18 -- The International Finance Corporation (IFC) has signed agreements to invest a total of about US$12.5 million in Indus Venture Investments Ltd. (Indus II) and India Direct Fund, L.P. (India Direct) to increase the availability of equity finance to small and medium-sized enterprises (SMEs) in India.
Support for SMEs has become one of IFC's main focuses as they are a vital source of economic growth but are often constrained by a lack of necessary capital, declining opportunities, and high costs of listing.
"These funds provide an effective way to channel long-term resources to SMEs, enabling them to take advantage of the emerging growth opportunities in India," said Mr. Rashad Kaldany, Manager in the Capital Markets Division of IFC's Asia Department.
Both funds will introduce many of their foreign investors to the Indian private equity market for the first time. These investors will assist the efforts of the funds by mobilizing further investment and introducing Western partners to the investee companies.
IFC's investment in Indus II will consist of a participation of up to US$5 million in a US$44-50 million venture capital fund, which is being raised from foreign investors. This is the second Indian venture capital fund promoted by the sponsor Mr. T. Thomas, Chairman of Indus Venture Management Ltd. (IVM) in Bombay. IFC also invested in the first fund, which is almost fully invested, and has a shareholding in IVM, which manages the first fund. IVM will act as advisor to the Mauritius-based Indus Investments Mauritius Ltd. (IIM), which will manage the new fund. IFC will also have a shareholding in IIM.
IFC's investment in India Direct will consist of a participation of up to US$7.5 million in a US$100 million private equity fund. India Direct is sponsored by International Equity Partners, L.P., a Washington D.C.-based investment banking firm, which will also manage the fund. 20th Century Finance Corporation Ltd., a leading Indian leasing and merchant banking company and an existing IFC client, is a joint promoter of the fund and will act as India Direct's local advisor.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
