IFC raising up to $1B for emerging markets fund of funds

World Bank’s private sector investment arm International Finance Corporation (IFC) is looking to raise a $750 million to $1 billion fund of funds for the emerging markets. The organisation is eyeing a first close by the end of 2014 or early next year.

IFC will put in an equity investment of up to $150 million in the IFC Global Emerging Markets Fund of Funds, which in turn will be managed by IFC Asset Management Company, a wholly-owned subsidiary of IFC.

The proposed fund expects to back at least 20-25 private equity and venture capital funds. It will deploy at least 80 per cent of its capital in a diversified set of new equity funds alongside IFC, which separately also backs PE/VC funds.

The fund-of-funds will also pick direct equity in investee companies through co-investments alongside investee funds and acquire stakes from eligible sellers – funds where IFC has already invested in. It would deploy up to 20 per cent of its corpus to this segment of the market.

IFC has not given a geographic breakup of the deployment of the proposed fund-of-funds, but given its exposure to India, a significant chunk of the money is expected to flow into the country.

Since 2000, IFC has invested over $4 billion in more than 200 funds. The asset management platform has over $6 billion in assets under management.

Early this year IFC committed up to $20 million for an emerging markets-focused education fund namely Education Innovation Fund, which would make investments in early to mid-stage education companies.

The venture capital fund is targeting $100-150 million, but final fund size may vary and will depend on the appetite from other institutional investors. IFC comes in as an anchor LP with its commitment in the form of a straight equity investment.

IFC selected Learn Capital, a venture capital fund focusing on investments in the education innovation and technology space, as the fund manager of the proposed fund.

(Edited by Joby Puthuparampil Johnson)

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