MICROCAPITAL STORY: International Finance Corporation (IFC), a Member of the World Bank Group, to Invest $10.9m in I&P Capital II, a Private Equity Fund for Microfinance in Africa’s Indian Ocean Nations

The International Finance Corporation (IFC), a member of the World Bank Group, has announced a EUR 7 million (USD 10.9 million) investment in I&P Capital II, a private equity fund that finances small-and-medium enterprises (SMEs) in Africa’s Indian Ocean nations.

Managed by I&P Management (Indian Ocean) Ltd., the fund will provide its clients equity financing and advisory services that include corporate governance and environmental management practices, mostly in its home countries of Madagascar and Mauritius. Investments in other nearby Indian Ocean countries, such as Comoros and the Seychelles, will also be considered.

MicroCapital has reported several notable transactions involving the IFC this year, including a USD 45 million deal last week with Britain’s Standard Chartered Bank, a USD 33 million investment in Centro Financiero BHD of the Dominican Republic in April, and, in February, a partnership with Citi to support the expansion of micro-lending in Bangladesh, a USD 20 million loan to MFI Banco Ficohsa of Honduras, and a USD 50 million investment in consumer finance company Micro Provident of Botswana.

Established in 1956, the IFC is a multilateral institution within the World Bank Group based in Washington, DC. It seeks to promote sustainable private sector investment in emerging economies worldwide. It has a cumulative committed portfolio of USD 790 million worldwide, making it one of the top three global investors in microfinance by volume. As calculated from its 2007 financial statements, the IFC’s return on assets was 6.46 percent, and its debt-equity ratio was 186.98 percent.

The I&P Capital II fund was established in July 2007 and has raised EUR 37.5 million (USD 58.4 million) for investment in ten to fifteen companies in a variety of sectors, including tourism, financial services, information technology and telecommunications, agribusiness, and infrastructure. It is not clear whether the fund has any other backers. I&P Capital II is the successor to I&P Capital Indian Ocean, a EUR 10 million (USD 15.6 million) fund established in 2003. This fund has been fully invested in seven companies and has been able to exit three of them.

By Stephen Son

Additional Resources:

IFC: “IFC Invests in Private Equity Fund to Support Small and Medium Businesses in Africa’s Indian Ocean Region “; 2007 Annual Report; I&P Capital (II) Ltd

MicroCapital.org article, May 19, 2008: “International Finance Corporation (IFC), a Member of the World Bank Group, to Invest $45m in Britain’s Standard Chartered Bank to Expand Microfinance in Africa and Asia”

MicroCapital.org article, April 24, 2008: “International Finance Corporation (IFC) to Invest $33m in Dominican Republic’s Centro Financiero BHD, a Provider of Microfinance and Other Financial Services”

MicroCapital.org article, February 25, 2008: “Citi teams with IFC to Support Expansion of BRAC Microlending in Bangladesh with USD 22M, Part of USD 55M Financing Deal”

MicroCapital.org article, February 22, 2008: “International Finance Corporation (IFC), a Member of the World Bank Group, to Lend $20m in Debt and Invest $400k in Advisory Services to Banco Ficohsa of Honduras”

MicroCapital.org article, February 5, 2008: “International Finance Corporation (IFC) Invests $50m in Consumer Finance Company Micro Provident Botswana (Letshego)”