The International Finance Corporation (IFC), the World Bank’s private-sector investment arm, has proposed an equity investment of up to $10 million in a private equity fund targeting financial institutions that provide sustainable finance to small businesses and individuals in India.
ECF Fund III LP is seeking to raise $150 million in total commitments to provide growth capital to financial institutions offering sustainable finance solutions to micro, small and medium-sized enterprises (MSMEs) and individuals, according to the investment proposal seen by CrowdFund Insider.
The fund expects to invest $10 million to $20 million in each of approximately eight financial institutions, supporting providers focused on lower-income segments and MSMEs as they expand their sustainable finance offerings.
Encourage Capital Management LLC will manage the fund, while a general partner to be established as Encourage GP LP will oversee the limited partnership. Both entities will be controlled by Encourage Capital LLC.
The fund is proposed to be organised as a limited partnership under the laws of Ontario, Canada.
The investment is intended to widen access to financing for smaller businesses and individuals in India, while supporting job creation by helping financial service providers scale solutions focused on sustainability.
The proposal also aims to strengthen India’s sustainable finance market by demonstrating a private equity model for backing financial institutions serving these segments. The fund’s deployment could encourage other managers to raise new or follow-on private equity funds focused on sustainability in the country.
IFC’s proposed commitment, alongside investments from other backers, is expected to help the fund secure its first close. The development finance institution’s participation could also give prospective investors greater confidence in the fund’s ability to scale its model and incorporate IFC’s environmental and social, integrity and governance policies into its operations.
The proposed investment remains a commitment under consideration rather than a completed transaction.