The International Finance Corporation has committed to investing $300 million in Indonesia through direct and private equity fund investments during 2013, according to the firm.
“You have a lot of people still in poverty and in very low-income conditions. So the fact it is such a large country, there is a huge amount of impact that can be made if we are able to facilitate capital in order to help this country of huge potential realise its goals,” Vikram Raju, senior global funds specialist at IFC, told Private Equity International.
The pledge follows IFC vice president Karin Finkelston’s meeting with the Indonesian finance minister and local partners in April to discuss the IFC’s role in the country’s sustainable development.
Finkelston said in a statement, “I believe that private sector participation can help extend access to basic infrastructure services. Early involvement of the private sector can bring creativity, efficiency, and capital to address complex infrastructure challenges.”
Last year, IFC anchored Indonesia-focused fund Falcon House Partners’ debut vehicle, which is targeting $200 million.
The fact it is such a large country, there is a huge amount of impact that can be made if we are able to facilitate capital
Vikram Raju, senior global funds specialist, IFC
IFC also remains committed to investing in India via private equity and direct investments as the country falls further out of favour with LPs, Raju added. Over the past weeks, the DFI directly invested $22 million in Ratnakar Bank and $70,000 in microfinance institution Utkarsh in India. So far in 2013, the firm has also invested in a number of India managers including CapAleph India Millennium Fund and Lighthouse.
Raju admits that good managers in India are easier to find than in Indonesia as it has a longer history of private equity. “The market in India started really growing in the late nineties and in terms of institutional development it has been growing for 14-15 years now. So naturally as an extension of that you have people who have worked in very prominent funds that have left and started their own firms. So the eco-system is somewhat more developed.”
He continued, “But you are starting to see that now in Indonesia – if you look at the larger funds, people are starting to come out of them and start their own funds and you are seeing first-time funds. So I think it is developing in the right direction.”