World Bank Group’s IFC Launch New Fintech Fund for Emerging Markets

The fund is launched in partnership with a leading investment firm, Victory Park Capital, and will increase debt capital available to fintech companies that lend to SMEs in emerging markets.

The International Finance Corporation (IFC), a member of the World Bank Group and Victory Park Capital (VPC), a leading investment firm focused on providing flexible debt and opportunistic equity solutions worldwide, has launched a new fund. The new fund will invest in financial technology companies in emerging markets. The partnership aims to improve access to debt capital for financial technology companies that lend to small businesses and consumers in emerging markets.

The new fund will combine VPC’s decade-long expertise in investing in financial services and financial technology with IFC’s leading role in investing in these sectors in developing countries. VPC and IFC will target growth investments in technology-driven companies across emerging markets with a focus on financial infrastructure, products and services.

“Our partnership with IFC, the largest global development institution focused exclusively on the private sector and a leading investor in financial technology in developing countries, opens a world of opportunities to fill the growing need for capital in emerging markets and scale our existing exposure,” said Brendan Carroll, senior partner and cofounder of VPC. “We are a long-standing investor to companies that provide innovative financial solutions, often overlooked by traditional investors despite generating attractive returns, and we are eager to continue identifying high-quality opportunities alongside IFC.”

Between 30 June 2016 and 30 June 2017, the IFC invested in four Indian startups and three Indian venture capital firms.  As at 30 June 2016, IFC had invested around $5 billion in India in sectors which included financial services, logistics, healthcare, and infrastructure.

The first Indian investment of the venture capital arm of IFC, aptly named IFC Venture Capital, was in 2014 in a chain of dialysis labs called NephroPlus. In 2016, it invested $25.7 million in Lenskart and $19.3 million in BigBasket. It has also invested approximately $40 million in startups like Power2SME (a B2B buying club targeting SMEs), Bjyu’s (the leading edtech app), Blackbuck (a platform enhancing efficiency of logistic operations) and Moglix (a B2B ecommerce startup transforming the supply chain in the manufacturing sector), and $33 million in VC funds like IDG Ventures, Stellaris Ventures Partners and Pi Ventures which invests exclusively in AI focused startups. For 2018, according to media reports, IFC proposes to invest up to $5 million in Bizongo, an ecommerce B2B marketplace for packaging materials and a further $10 million in Power2SME’s parent company, BEBB India.

Kai Schmitz, principal investment officer of IFC, said, “Over the past few years, IFC has become a leading investor in financial technology companies in emerging markets which offer new solutions that expand access to finance. At the same time, we have seen a lack of growth capital available to these companies, both debt and equity financing to support new lending solutions. Partnering with Victory Park Capital allows us to bring the expertise of one of the leading specialized investors in this area to emerging markets and will encourage other investors to follow.”

VPC was founded in 2007 and is headquartered in Chicago. It has made over 40 investments in this sector globally. Victory Park Capital Advisors, is a privately-held, SEC-registered alternative investment firm. As an internationally recognized financial services investor, VPC finances both emerging and established businesses seeking liquidity and, or, capital structure reforms with the goal of accelerating value creation and generating attractive returns.

IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. It works with more than 2,000 businesses worldwide, to create markets and opportunities in the toughest areas of the world. In FY17, it delivered $19.3 billion in long-term financing for developing countries.

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