The International Finance Corporation (IFC) has proposed a cornerstone commitment of $20 million in The Abraaj Group’s $200 million Pakistan-focused fund, set up to invest in small and medium enterprises (SMEs).
IFC’s proposal notes an equity investment of up to $20 million in the fund, not to exceed 20 per cent of total fund commitments.
A filing on IFC detailed that the Abraaj Pakistan Fund I will invest in midcap private companies with regional growth potential based in Pakistan and operating in consumer driven sectors, such as as education, healthcare, as well as utilities (renewable energy/wind), transportation, retail, good & services.
Abraaj, a private equity firm based in the United Arab Emirates, will invest in eight to 10 micro-financing projects in Pakistan, with ticket sizes ranging between $5 million and $40 million.
According to the filing, IFC’s investment will help catalyse other investors to the fund’s first close and will send a strong signal of commitment to private sector development in Pakistan.
“IFC’s participation will enhance investor confidence to channel more stable institutional capital flows to a country that typically has difficulty attracting equity investors, (and) advocate the implementation of corporate governance and environmental & social standards in the Fund’s investments,” the filing read.
The expected portfolio will largely be comprised of business activities that have limited environmental and social risks and impacts that are site specific, largely reversible and can be readily addressed through mitigation measures, IFC said.
The World Bank executive board is expected to approve the IFC equity investment in July.
Founded in 2002, Abraaj invests in emerging markets across Asia, Africa, Latin America, the Middle East, and Turkey.
As of May 2016, the group asset under management reached $9.6 billion. It has 300 limited partners including the Gates and Skoll foundations and the European Investment Bank.