Ironwood holds first close for Sri Lanka PE fund

The fund, which is targeting $30m, says it’s the first to reach a first close in Sri Lanka since 2009

Ironwood Capital Partners has held a first close at $25 million for its debut Sri Lanka-dedicated fund.

According to the firm, it is the first Sri Lanka-focused dedicated private equity investment vehicle to hold a successful first close since the end of the Sri Lankan civil war in 2009.

In a statement, Colombo-based Ironwood said it sought to “strengthen the national economy through key strategic investments and supporting the development of the private equity industry in the country.”

There have been at least four other Sri Lanka dedicated funds launched since 2009, according to managing partner Chanaka Wickramsuriya, but the others have thus far only announced an intention to raise capital.

Ironwood’s fund is targeting $30 million, and the firm is due to hold a second close in December, Wickramasuriya told Private Equity International.

The capital has been raised primarily from offshore investors, the majority of whom were Asian high net worth individuals, according to Wickramasuriya. The fund will focus on investments of between $3 million and $7 million in small- and medium-sized enterprises at various stages of maturity across a range of sectors, he added.

“Our team will spend a significant amount of time with investee companies to help improve performance,” said managing partner Hiran Embuldeniya, a director at York Street Partners, a boutique investment bank in Sri Lanka, and a former Goldman Sachs investment banker.

Ironwood will seek investment opportunities “aligned with the five hubs strategy” set out by the government in 2010. This strategy focuses on developing the country’s economy with a special focus on developing capacities in five sectors: maritime and ports; aviation and logistics; commercial services, including tourism and finance; energy; and knowledge, including information technologies and higher education. Ironwood will also address what it identifies as some of the biggest challenges facing SMEs today, including access to finance, improved back-office functionality, improved governance, and access to top-tier personnel and business networks.

“Investments like these not only give investors potentially excellent returns but are crucial in strengthening Sri Lanka’s economy, supporting innovation and entrepreneurship, building locally based regional platforms and creating hundreds, if not thousands of new jobs,” Steven Enderby, non-executive chairman of the investment committee, said in a statement.

In early 2014, Sri Lanka-focused private equity fund manager Jupiter Capital Partners – founded by former Aureos Capital exec Indika Hettiarachchi – said it would be increasing the target for its debut fund, Jupiter Sri Lanka Growth Fund, which it launched in 2013, from $50 million to $75 million due to widespread investor interest, PEI reported at the time.