IFC and US-based fund manager Partners for Growth (PFG) are uniting to provide much-needed debt capital to innovative early- to mid-stage companies in emerging markets, with a focus on fintech, software, e-logistics, health, and life sciences firms.
IFC, a member of the World Bank Group, will invest $30 million in a new investment vehicle managed by PFG. The vehicle will be PFG's first managed account dedicated solely to global emerging markets and IFC's first investment with a private debt manager focused on venture and growth stage markets. PFG will collaborate with its long-time strategic partner, Silicon Valley Bank, on the initiative.
"The COVID-19 pandemic has heightened uncertainty and risk aversion in emerging markets, limiting the amount of credit available for small- to mid-sized companies," said Paulo de Bolle, Global Senior Director of IFC's Financial Institutions Group. "Our partnership with PFG will play a key role in improving access to finance for deserving high growth technology businesses."
The adoption of digital business has accelerated tremendously in the last two years as the world adapted to the pandemic. Nowhere is the scope for impact greater than in emerging markets as they rebound in the coming years. This partnership will support the growth of small and medium enterprises across the technology sector and allow new financial services providers to thrive. Deepening capital markets is an essential element to improving the economic recovery. By providing scarcely available private credit to innovative businesses in developing countries, the partnership with PFG is aligned with IFC's strategy of scaling up investments to reverse economic decline, foster technological innovation, and mobilize private capital at scale.
Over the past two years, the rapid growth of venture capital has expanded equity funding availabile for technology companies, but in many emerging markets this speciality lending market remains less developed. The partnership between IFC and PFG is focused on addressing this financing gap.
"Across the global markets where PFG invests, we see some of the most compelling opportunities from emerging markets, where companies can create new categories and pioneer solutions that deliver impact. Building upon the momentum behind rapid digital adoption, innovative companies are providing localized solutions that allow them to leapfrog incumbent firms and legacy technologies. Fintech companies are bringing financial services to vast underbanked populations, enhancing financial inclusion and supporting economic growth, while opening new attractive markets across a broad range of financial services," said Andrew Kahn, Managing Director and CEO of PFG. "We are thrilled to be working with IFC on this partnership to bring new capital solutions to technology and innovation companies in emerging markets."
In addition to supporting innovative tech companies with debt capital, the partnership is expected to help spur the development of the private sector debt market in developing countries by demonstrating the viability of lending to growth-stage companies.
The new initiative will provide IFC with an indirect participation in qualified lending and investment transactions made by PFG. IFC will receive an allocation of each qualifying PFG investment in emerging markets.
PFG specializes in alternative debt investments in growth companies globally. Since its debut, PFG has raised seven funds and invested over $1.2 billion into more than 220 companies through custom debt instruments and has a track record spanning more than 30 years, including the managers' time together operating as a subsidiary of San Francisco investment bank Hambrecht & Quist.
IFC?a member of the World Bank Group?is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
About Partners for Growth
Partners for Growth (PFG) provides custom debt for venture and non-venture backed emerging growth stage companies globally. Established as Partners for Growth in 2004, the firm's investment strategy dates to the mid-1980s when the co-founding partners managed the venture lending practice of technology investment bank Hambrecht & Quist, purchased by JPMorgan Chase in 1999. Leveraging decades of experience dedicated to this market, PFG has structured tailored debt facilities to support growth and expansion, working capital, fintech warehouse and acquisition financing needs for over 200 portfolio companies globally since inception. For more information, visit www.pfgrowth.com.
These press releases may also interest you