Gaja Capital Fund I, Ltd.

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	26926
Company name	Gaja Capital Fund I, Ltd.
Country	India
Sector	Collective Investment Vehicles
Environmental category	FI
Department	Private Equity and Investment Funds
Status	Pending Signing

Date SPI disclosed	May 22, 2008
Projected board date	June 23, 2008
Previous Events	Approved: August 20, 2008

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project is to make an equity commitment of up to $15 million, not to exceed 20% of total commitments, in Gaja Capital Fund I, Ltd. (the Fund), a private equity fund which will seek equity and equity-related investments in high growth companies whose principal business is in India. Gaja Capital Fund I has a target size of US$200 million. The Fund expects to invest growth capital between $5 to $15 million across 10-15 deals, and provide active involvement in operational and financial management to accelerate portfolio company growth as a means of achieving long-term capital appreciation. The Fund will invest in emerging sector leaders with strong growth potential across the services and manufacturing sectors.

Anticipated development impact of the project

The Fund is expected to have a strong impact for private sector development as follows:

- Support of SMEs:

The Fund is expected to allocate part of its commitment to SMEs.

- Private sector development:

The Fund will add value to its investee companies, by providing managerial, operational and strategic support to improve their competitiveness and sustainability

-Economic development:

The Fund is expected to invest in high-growth companies aiming to increase output, which in turn should lead to increased employment rates.

- Environmental practices:

The Fund Manager will adopt international best practices for environmental and social risk assessment and management, and improve transparency and corporate governance, thus transferring knowledge and skills to portfolio companies

- Geographic reach:

The Fund’s target businesses will directly impact Tier II and Tier III cities in India, either through direct employment, economic development, or the provision of goods and services.

IFC's expected development contribution

IFC’s role includes:

- Catalytic role mobilizing additional institutional capital:

IFC’s commitment will broaden Gaja’s investor base and help attract additional interest from institutional investors.

- Providing input on fund structure and terms:

Drawing from previous experience, IFC will work with the Fund Manager in adopting best practice market terms that will attract private capital.

- Improving corporate governance:

IFC will play an active governance role through its participation on the Fund’s Advisory Board.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the investment vehicle’s expected portfolio and sectors of investment and determine the Applicable Performance Requirements if any, that would include a combination of: The IFC FI Exclusion List, The applicable National Social and Environmental Laws and regulations, and/or The IFC Performance Standards.

IFC will also review, if required, the capacity of the investment vehicle to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). IFC may suggest Supplemental Actions to address any gaps in the SEMS if required. The Investment Manager will be required to: Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC; Identify responsible, qualified persons to manage and implement the SEMS; Commit to implement the SEMS to ensure that its investments/activities are in compliance with the Applicable Performance Requirements; Submit a periodic report to IFC as per a format to be provided by IFC.

IFC PROJECTS