Dec 16, 2014 (LBO) –Sri Lanka launched Emerald Sri Lanka Fund, a private equity fund, targeting a 50 million US dollar fund which will provide financing to small and medium enterprises in Sri Lanka that has strong growth potential, an official said.
The fund will be run NDB Zephyr Partners, a joint venture between by New York based Zephyr Management and Colombo base NDB Bank group.
The fund will invest in small and mid-sized businesses seeking growth.
“Without equity the companies cannot grow 20 to 30 percent,” Vajira Kulatilaka, Chief Executive of NDB Capital Holdings PLC said.
“If you are growing at 10 percent what will happen is that you will have go for internal cash generation and loans to but at a lower growth trajectory,”
“But if you want to grow at a higher trajectory you need an equity base. And that equity base is not here.”
“In Sri Lanka, unless you go for an IPO, there is no way for a company or a SME can get equity in this country,”
” So there is a gap and we are filling it.”
He was speaking at the launching ceremony held Colombo yesterday.
Pointing out an example of Face book, a social media network, Kulatilaka said that the company (Facebook ) had injected private equity several times before proceeding to an IPO.
Face Book grew from 0.5 million dollars in 2004 and went for a 16 billion dollars IPO in 2012.
“The first few investments were done by angle investors. Then it was venture capital. Lastly there was many stages of private equity placements before going to an IPO,” Kulatilaka said.
“This is what we should do in this county,”
“Before going to an IPO, we should have that several rounds of equity investments to make the company grow and then make the company public at the right time.”
The fund plans to make an investments in the range of two million US dollars to six million US dollars in equity and equity linked securities in small and medium sized enterprises in the island.
It is estimated 75 percent of all enterprises fall into the SME category in Sri Lanka and 45 percent of country’s employment represent by SME’s.
SME’s represent nearly 80 percent of 4700 Sri Lankan exporters.
Emerald Sri Lanka will make 10 to 12 investments for the next four year time period with 3 to 5 years exiting plan through IPO, buy back agreement or trade sale.
“We will not only provide equity but also add value to the company,” Kulatilaka said.
"We will add value by providing support and expertise on capital structures, financial reporting, business development, management development, corporate governance, strategy etc. to the portfolio companies."
The fund investors include IFC, a memberof the World Bank Group, DEG –Deutsche Investitions-und Entwicklungsgesellschaft mbH and FMO, the Netherlands Development Finance Company.
“The growth in Sri Lanka has been very strong and head count poverty is less than 7 percent and all the macroeconomic indicators heading in the right direction,” Adam Sack, IFC Country Manager for Sri Lanka and Maldives said.
“One of the missing ingredients for Sri Lanka is long term Capital particularly in small and medium sized enterprises.”
“How can you create income without long term risks?”
“And this gap, we are planning to fill though Emerald Sri Lanka.”
The fund will be run NDB Zephyr Partners, a joint venture between by New York based Zephyr Management and Colombo base NDB Bank group.
The fund will invest in small and mid-sized businesses seeking growth.
“Without equity the companies cannot grow 20 to 30 percent,” Vajira Kulatilaka, Chief Executive of NDB Capital Holdings PLC said.
“If you are growing at 10 percent what will happen is that you will have go for internal cash generation and loans to but at a lower growth trajectory,”
“But if you want to grow at a higher trajectory you need an equity base. And that equity base is not here.”
“In Sri Lanka, unless you go for an IPO, there is no way for a company or a SME can get equity in this country,”
” So there is a gap and we are filling it.”
He was speaking at the launching ceremony held Colombo yesterday.
Pointing out an example of Face book, a social media network, Kulatilaka said that the company (Facebook ) had injected private equity several times before proceeding to an IPO.
Face Book grew from 0.5 million dollars in 2004 and went for a 16 billion dollars IPO in 2012.
“The first few investments were done by angle investors. Then it was venture capital. Lastly there was many stages of private equity placements before going to an IPO,” Kulatilaka said.
“This is what we should do in this county,”
“Before going to an IPO, we should have that several rounds of equity investments to make the company grow and then make the company public at the right time.”
The fund plans to make an investments in the range of two million US dollars to six million US dollars in equity and equity linked securities in small and medium sized enterprises in the island.
It is estimated 75 percent of all enterprises fall into the SME category in Sri Lanka and 45 percent of country’s employment represent by SME’s.
SME’s represent nearly 80 percent of 4700 Sri Lankan exporters.
Emerald Sri Lanka will make 10 to 12 investments for the next four year time period with 3 to 5 years exiting plan through IPO, buy back agreement or trade sale.
“We will not only provide equity but also add value to the company,” Kulatilaka said.
"We will add value by providing support and expertise on capital structures, financial reporting, business development, management development, corporate governance, strategy etc. to the portfolio companies."
The fund investors include IFC, a memberof the World Bank Group, DEG –Deutsche Investitions-und Entwicklungsgesellschaft mbH and FMO, the Netherlands Development Finance Company.
“The growth in Sri Lanka has been very strong and head count poverty is less than 7 percent and all the macroeconomic indicators heading in the right direction,” Adam Sack, IFC Country Manager for Sri Lanka and Maldives said.
“One of the missing ingredients for Sri Lanka is long term Capital particularly in small and medium sized enterprises.”
“How can you create income without long term risks?”
“And this gap, we are planning to fill though Emerald Sri Lanka.”
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