Seven European development finance institutions (DFIs) have invested in Global Environment Fund’s South Asia Growth Fund II, which will back businesses promoting energy and water efficiency in India and Bangladesh, the firms said.
The DFIs have cumulatively invested about $115 million (Rs 812 crore at current exchange rate) in the fund, which marked its first close at $130 million (Rs 918 crore at current exchange rate). The institutions are Belgian Investment Company for Developing Countries, UK’s CDC Group, European Investment Bank, Netherlands’ FMO, France’s Proparco, Swiss Investment Fund for Emerging Markets, and the Swedish government’s Swedfund.
The fund will invest in businesses promoting cleaner sources of energy and industrial production, efficient unitisation of energy and materials and sustainable management of natural resources in South Asia. The bulk of the fund will go towards India, though the entity will also invest in companies in Bangladesh.
South Asia Growth Fund II has already made an initial investment in ESDS, which creates eco-friendly technologies on its patented eNight Cloud Technology.
“Resource scarcity is one of the key challenges in Asia and South Asia Growth Fund is the only private equity fund that supports small and medium enterprises operating in the under-served resource-efficiency market. Our capital enables South Asia Growth Fund to provide investments to businesses that address cleaner and more efficient production and usage of energy, water and food resources,” a CDC spokesperson said. CDC committed $25 million (Rs 176.5 crore at current exchange rate) in South Asia Growth Fund II.
The Global Environment Fund was established in the 1990s. The GEF Capital Partners was spun out in 2018 as an investment manager to develop Global Environment Fund’s middle market and growth equity investment programmes in North America, South Asia and Latin America.
The firm makes investments in the range of $10-40 million in businesses that have an established operating profit of at least $3 million.
In its first version, the Global Environment Fund had partnered Yes Bank to launch a $300 million fund in 2008.