(EconomyNext) – Sri Lanka’s NDB Capital Holdings and New York-based Zephyr Management are to set up a 50 million US dollar private equity fund together with foreign development banks to invest in the island’s small businesses.
The Emerald Sri Lanka Fund will make investments in the range of 2-6 million US dollars each in fast-growing small and medium enterprises seeking expansion capital.
The fund is looking at a 3-5 year exit time horizon. Exit will be either through an initial public offering or through trade sales to domestic or international buyers.
The fund’s investors include experienced emerging markets investors like IFC, a member of the World Bank Group, DEG – Deutsche Investitions-und Entwicklungsgesellschaft mbH and FMO (the Netherlands Development Finance Company).
"We believe the launch of the Emerald Fund will help facilitate the emergence of a new industry that will serve many Sri Lankan companies in the years to come," said Rajendra Theagarajah, Chief Executive of NDB Group.
Thomas Barry, Founder and Chief Executive of Zephyr Management, said this was the first institutional PE fund in the island.
The fund manager, NDB Zephyr Partners, is jointly owned by NDB Capital Holdings, a Sri Lankan investment bank, and Zephyr Management LP, a global emerging markets investment firm.
NDB Zephyr will help portfolio firms in areas like strategic planning, management development, financial management, corporate governance and operational efficiencies, said Karthik Bhat, a joint Managing Director of NDB Zephyr Partners.
It will also help the firms access international markets, management expertise and technology using the global network of the partner organisations in the Emerald Fund.
The fund will see significant minority stakes and target firms positioned to benefit from scale through regional or global market penetration or increasing domestic consumption.