Investment funds

Investment funds
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Merec
In order to support private sector development in Southern countries, Proparco also operates via investment funds (private equity).

Introduction

Key players in financing companies in the South 

Investment funds are able to finance actors that Proparco could not directly support, particularly microenterprises, SMES and start-ups, in key development sectors, such as infrastructure, health and the agro-industry. 

By bringing together international investors who are willing to invest (but not directly) in activities and/or countries that are a priori deemed risky, these funds have demonstrated their capacity to mobilize considerable resources that will be invested in companies in the South – thereby contributing to their growth and to job and wealth creation.
 

The investment funds supported by Proparco are an additional tool to AFD Group operations: they contribute to fulfilling its mandate for sustainable development and inclusive growth.

Real Added Value

One of the advantages of funds is that they provide close support to companies in their portfolios (strategic advice, putting them in touch with financial partners, environmental and social policy…).

The fact that they are locally based, particularly in Sub-Saharan Africa, and their sectoral and/or geographical expertise, represent real added value to support companies in the South at every stage of their development.

This is especially because the fund managers are generally members of the decision-making bodies of the funded companies and thereby play a positive and active role in their governance.

Rigourous Selection and Supervision

Proparco only supports funds that are engaged in a real developmental approach.

Prior to any financing, it conducts an in-depth analysis of their management team, their investment strategy and the suitability of the potential companies to finance in terms of its mandate.

It also ensures that the funds in which it invests have an environmental and social (E&S) policy in accordance with the highest standards or, otherwise, helps them improve their E&S and governance performance.

Like other development finance institutions, Proparco pays close attention to ensuring that its financing in funds is used in an effective manner and in accordance with its objectives.

It requires regular detailed reporting from them, in particular on the E&S aspects, which allows it to detect any bad practices by companies in the portfolio and propose possible ways of improvement.

In terms of financial security, Proparco applies AFD Group’s in-house procedures, which are some of the most demanding among donors. No fund supported by Proparco is registered in a Non-Cooperative Jurisdiction (NCJ) and no entity involved in the management teams or shareholding of funds is on the sanctions lists of the UN, European Union or France.

In their investments, they all apply the same level of vigilance as Proparco applies to its direct investments.

At the end of 2013, the 56 investment funds in Proparco’s portfolio had financed 250 companies, which themselves had contributed to creating or maintaining 120,000 jobs.

They support microfinance institutions, fair trade or organic producers’ organizations in Africa, clean energy infrastructure projects in Southeast Asia, agricultural and agro-industrial SMEs in India…

Projets
Investment fund