IFC to invest $25 mn in SME fund

International Finance Corporation (IFC) is planning to invest around $25 million in the India 2020 Fund II, a successor fund to India 2020 Fund I. The new fund has a target size of $125 million and will focus on investing in Indian small and medium enterprises (SMEs) in healthcare, education, rural consumption and agribusiness.

The fund will be a Mauritius-registered company, and will operate primarily through one or more subsidiaries formed in the Republic of Mauritius, which will acquire, own and operate the portfolio of investments.

“IFC’s commitment will act as a stamp of approval and help mobilise other sources of capital, contributing to a successful closing…In addition, IFC has intensive experience of investing in SMEs across manufacturing and services sectors, and will be able to share knowledge with the fund and its investees,” the corporation said.

The fund aims to offer growth equity and strategic and operational assistance to SMEs in India. It will aim to invest $5-15 million per company for a significant minority stake.

The Fund is a successor to India 2020 Fund I — a 2008 vintage fund of $100 million, with an estimated exit gross IRR of 30 per cent, focused on job creation, gender equality and corporate governance.

MUSE Capital Advisors Limited (Fund Manager), a private limited liability company, will act as the investment manager of the fund.