NEW DELHI, INDIA, November 3, 1998 — The International Finance Corporation will invest in India's rapidly growing and evolving auto ancillary sector that supplies the automotive industry, through the India Auto Ancillary Fund, a private equity fund with a targeted capital of US$30 million.
The auto ancillary sector – which includes components and sub-systems for automobile assembly – has grown rapidly since the Indian automotive industry was liberalized in 1991. It is now undergoing major structural change as international companies compete on the Indian market and new technologies are brought on stream. There is a process of consolidation underway among some 500 automotive ancillary firms and another 3,000 businesses that supply the auto industry in the informal sector.
This new business environment in India provides excellent investment opportunities for the fund, according to Rashad Kaldany, IFC's Director for South and Southeast Asia. He said that the fund would bring technological and engineering development, especially for smaller companies involved in auto ancillary production. The fund is likely to invest in about 10 to 12 companies, he said.
On Oct. 26, IFC signed the first closing of the India Auto Ancillary Fund which is a closed-end 8-year private equity fund. IFC will invest up to 15 percent of the total value of the fund, which is being promoted by Infrastructure Leasing and Financial Services (IL & FS), a leading Indian financial institution that commercially develops and finances infrastructure services. Other investors include DEG-Deutsche Investitions und Entwicklungsgesellschaft (the German development agency), Nissho Iwai, the Tamilnadhu Industrial Development Corporation, Bank of India, and Mahindras. The fund will be managed by IL & FS Venture Corporation Limited (IVC), which manages venture capital and private equity funds.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
