The IFC is committing $200 million to the IFC Financial Institution Growth Fund, an investment vehicle that makes equity investments in emerging market financial institutions alongside the IFC to help improve SME access to financing in those markets.
Of the $200 million, $150 million will be committed to the first close, which along with commitments from other investors will bring the first close of the fund to approximately $345 million. According to the press release on the IFC’s website, three of these investors have already committed approximately $105 million for future closings of the fund. Other institutions participating in the fund include the State Administration of Foreign Exchange of China, the Japan Bank for International Cooperation, and the Hungarian Export-Import Bank.
The Fund will help provide a platform to mobilize private capital investment in emerging markets where institutions face challenges in raising finances due to perceptions of system risk, changing regulatory environments and funding constraints. Investors in the fund will get access to the IFC’s pipeline of investment opportunities and will be able to develop a protfolio of diversified financial institutions in the fast-growing emerging markets.
The IFC’s committed portfolio in financial institutions totaled more than $24 billion by the end of the DFI’s 2014 fiscal year.