Private equity is an important force in financial markets, accounting for about $200 billion in investment worldwide each year. But only 10 percent of it reaches emerging markets.
This is a tremendous loss of opportunity for investors—because it means capital isn’t being invested in the fastest-growing economies. IFC works to increase the involvement of private equity funds in emerging markets, because our partnerships with them ensure that we bring much more than capital to the table. Working with private equity funds, we also promote job creation, strengthen corporate governance, and help improve environmental and social practices.
IFC is often the first private equity investor in some of the world’s poorest countries—and we do it profitably, setting an example for other investors. We help countries establish a sound regulatory framework for private equity investment, train local fund managers, and work with promising new businesses. In doing so, we help lay the foundation for strong private equity participation in emerging markets.
IFC’s portfolio of private equity investments now stands at more than $4 billion in more than 200 private equity funds. We estimate that such investments created about 300,000 new jobs between 2000 and 2011. The average rate of job growth for companies we invested in during this period was more than 15 percent.
DEVELOPING BETTER BUSINESSES
Consider a few examples of our work:
- In Mexico, innovative start-ups have normally faced difficulty finding early-stage financing. That’s because the country has few venture-capital firms. So when a domestic venture-capital company, Alta Ventures Mexico Fund, was created, IFC was the first to invest. By 2013, the fund had raised $70 million, and attracted the participation of 30 leading Mexican industrialists, and has created an average of 50 jobs for every investment it makes.
Financing from Alta Ventures has boosted companies like Fricaeco—which produces affordable solar water heaters—and Ondore, which helps Mexican companies manage their online reputation. Both have received capital and technical guidance that have dramatically improved their performance.
- In Bangladesh, IFC is reaching innovative companies through Bangladesh SEAF Ventures, as part of our SME Ventures program. This enabled us to invest $1 million in SOLARIC, a developer of renewable energy products that provide clean, affordable solar power for rural communities. In 2013, the company reached 3,000 villages, serving 35,000 rural households and replacing 100,000 kerosene lamps—all while generating a profit.
- And in Tunisia, IFC has partnered with TunInvest, which provides risk capital and expertise to several small and medium enterprises. TunInvest’s involvement has helped Altea Packaging to nearly quadruple its workforce to 680 employees and ensure that its growth remains sustainable.