Dutch development financier FMO is considering another $1.4 million commitment to Emerging Markets Investment Advisers’s (EMIA) second fund to help the latter support its portfolio in the face of COVID-19.
FMO said the increased commitment aimed to replenish the Cambodia-Laos-Myanmar Development Fund II’s (CLMDF II) follow-on reserves “fully earmarked to support existing portfolio companies.”
“While the Fund’s investees have shown resilience, capital earmarked for future growth has been depleted to cover working capital and operating expenses during the lock-down. The Fund’s follow-on strategy has also been affected,” the development finance institution said in an investment proposal.
The capital is expected to support CLMDF II’s 13 portfolio companies both during and after the crisis.
“An increase in commitments would help the Fund achieve its value creation objectives and support investees in reaching their initial growth targets,” FMO added.
FMO had earlier committed $10 million to CLMDF II’s first close in 2015. The fund was closed at $64.5 million and fully deployed into 13 companies, the majority of which were in Cambodia, while Myanmar and Laos represented four and three investments, respectively.
Joshua Morris, CEO of EMIA, told DealStreetAsia last month that the firm has been focused on working with its investors to increase commitments to the second fund’s follow-on reserves.
He also revealed that EMIA was looking to tap both existing and new limited partners (LPs) to raise up to $120 million for a new vehicle. The third fund will continue the predecessor’s strategy of investing in Cambodia, Myanmar and Laos, being sector-agnostic.
“We expect to cover a fairly broad range of investment sizes in the new fund while leaving sufficient follow-on reserves to support growth after our initial investment,” Morris said.
LPs in EMIA’s funds also include the International Finance Corporation and other European development finance institutions such as Norfund, Finnfund and Swiss Investment Fund for Emerging Markets.
“We have received strong indications of interest from our existing LP base as well as from new investors. Our markets remain, I believe, a priority for many of our LPs,” the CEO said.
EMIA’s $19.65-million first fund invested only in Cambodia and Laos. It has divested most of its investments, according to Morris, including a stake in Cambodian microfinance firm AMK and Park Café.