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| Frontier Fund (Bermuda) Ltd. |
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| 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 | 27881 |
| Company name | Frontier PE (Bermuda) L.P. |
| Country | Bangladesh |
| Sector | Collective Investment Vehicles |
| Environmental category | FI |
| Department | Private Equity and Investment Funds |
| Status | Active |
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| Date SPI disclosed | April 8, 2009 |
| Projected board date | June 15, 2009 |
| Previous Events | Invested: August 21, 2009
Signed: June 30, 2009
Approved: June 24, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The Frontier Fund (Bermuda) Ltd (“Frontier” or the “Fund”) is a Bermuda-registered investment fund that will focus on investing in listed securities as well as the securities of privately-held companies in Bangladesh. The Fund is currently structured as an open-ended fund and had a first closing in June 2008 but accepts new investments and redemptions semi-annually after an initial 3 year lock-up period. The Fund’s target sectors include pharmaceuticals, auto and ancillaries, healthcare, education, financial services, retail and distribution, telecommunications and consumer goods. |
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| Project sponsor and major shareholders of project company |
| The Frontier Fund will be managed by Brummer & Partners Asset Management (Bangladesh) Ltd (“B&P Bangladesh” or the “Advisor”), a Bangladesh limited liability company, a subsidiary of Brummer & Partners, AB, Sweden, a well-known Scandinavian fund manager. |
| Total project cost and amount and nature of IFC's investment |
| The project is a proposed IFC equity investment of the lesser of $10 million or 20% of the committed capital of the Fund. |
| Location of project and description of site |
| The Frontier Fund is structured as a Bermuda-registered exempted mutual fund company. The Manager’s investment team are based in Dhaka, Bangladesh and are a combination of local and international investment professionals. |
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| Anticipated development impact of the project |
This project is in line with IFC’s overall strategy in Bangladesh, a frontier IDA country, which prioritizes an investment program for the development of capital markets and institution building, infrastructure, general manufacturing and services and innovative projects in health and education. In addition, the project is expected to have the following development impact:
Employment growth: The Fund is expected to invest in growth companies that will generate new jobs.
Support for SMEs: This Fund will support equity investment in small and mid-sized companies, most of which are expected to qualify at the time of investment as SMEs under the World Bank Group’s definition.
Strengthen Corporate Governance: With the help of IFC, the Fund manager will draw on a list of corporate governance initiatives and screens to pursue with investees. The Fund will help implement practicable steps in improving the corporate governance of investees through activist investing and monitoring. |
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| IFC's expected development contribution |
Through its investment in the Fund and participation on the Advisory Board, IFC will have the following contributions:
- support a first-time fund management team in Bangladesh
- introduce a new asset class/ financial product to Bangladesh
- supply growth capital and professional management advice to investee companies of the Fund
- utilize the Fund as a vehicle with which to actively implement improvements in corporate governance in investee - companies on both the listed and private side of the Fund’s operations. As the Fund is the first such of its kind in Bangladesh, it is expected to raise the awareness of corporate governance in general in the private sector in Bangladesh.
- allow IFC to leverage its own capital with third-party funds |
| 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 fund’s expected portfolio and sectors of investment and determine the Applicable Performance Requirements that would include a combination of:
The IFC FI Exclusion List and/or The applicable National Social and Environmental Laws and regulations and/or The IFC Performance Standards
IFC will also review the capacity of the fund manager 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 fund 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 will review the implementation and performance of the Fund’s SEMS for the first few projects, prior to the Fund’s investment, to ensure that the Fund’s SEMS is robust. For all Category A subprojects the Fund will need to satisfy IFC that the subprojects are in compliance with the Performance Standards or have a satisfactory action plan to bring the subprojects in to compliance within a reasonable time frame prior to investing. |
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| For inquiries about the project, contact: |
Mr. Khalid Quadir
Chief Executive Officer
50 Mohakali 12th Floor, Dhaka – 1212, Bangladesh
Tel: +880 1711 526936 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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