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IFC, Soverign Wealth Funds Partner in $800mln Fund

The International Finance Corp said on April 12 it would partner with sovereign wealth funds and pension funds from Azerbaijan, the Netherlands, Saudi Arabia and South Korea in an $800 million fund that will invest in companies in Africa and elsewhere.

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IFC, the World Bank's private-sector lender, said it had invested $200 million in the fund and additional commitments were from Dutch pension fund manager PGGM, Korea Investment Corp, State Oil Fund of the Azerbaijan Republic and a fund investor from Saudi Arabia.

The fund will be managed by IFC Asset Management Company, a wholly-owned subsidiary of IFC, which will buy equity stakes in companies in Africa, Latin America and the Caribbean.

World Bank President Robert Zoellick in 2008 called on state-owned wealth funds to invest some of their cash in potentially lucrative markets in developing countries to boost economic growth through investment in companies.

"Pension and sovereign funds represent a significant savings pool that is seeking commercial returns and portfolio diversification," Zoellick said in a statement.

"With this fund, we will demonstrate that developing countries have high-quality investment opportunities to attract commercial investors."

Sovereign wealth funds have existed since the 1950s but as large Asian exporting countries and oil producing nations have seen their currency reserves balloon, these funds have mushroomed in size and number. Today the funds are believed to control assets worth between $2 trillion to $3 trillion.

IFC has been successful in mobilizing capital and working with the private sectors in Africa and other regions of the developing world as part of a broader mission to spur economic growth and reduce poverty.

Lars Thunell, IFC chief executive officer and executive vice president, said the fund was part of IFC's strategy to tap the growing investment opportunities in frontier markets.

"With the launch of this fund we are providing equity co-investment opportunities to sovereign and pension fund investors for the first time," Thunell said.

Source: Reuters

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