Submitted by: International Finance Corporation
Posted: May 07, 2007 – 03:20 PM EST
WASHINGTON DC.- May 7, 2007 – IFC, the private sector arm of the World Bank Group, and Aureos Capital Limited, a private equity fund management company based in Mauritius, have launched an initiative to help small and medium enterprises in emerging markets improve their environmental and social performance.
The SME Sustainable Opportunities Initiative will channel funding from IFC and other donors to support various environmental, social, and health and safety upgrades in small and medium enterprises in which Aureos-managed private equity funds have invested. The initiative will allow a number of SMEs to reduce carbon emissions, improve energy and water efficiency, reduce effluents, and develop HIV/AIDS awareness programs.
Noah Beckwith, Aureos Partner responsible for environmental and social management, said, "Many small and medium enterprises throughout the developing world recognize the importance of sustainability, and more specifically, the business case for improved environmental and social performance. Regrettably, the initial cost of implementing such improvements is often beyond the means of SMEs. Through this joint initiative, Aureos and the IFC have recognized the urgent need to remove this financing obstacle."
According to Rachel Kyte, IFC Director of Environment and Social Development, "This is the first time that IFC will work with a private equity fund management company targeting the SME sector to support its clients’ efforts to move beyond compliance with local environmental and social requirements. We hope to show that financial performance and environmental and social performance go hand in hand. We expect that the initiative will have a multiplier effect across the business and financial community."
The first project expected to benefit from this initiative is a steel manufacturer in Kenya, which needs help to further reduce its smoke emissions. Other projects being considered include a pharmaceuticals company planning to expand production capacity of anti-retrovirals in Tanzania, a paint manufacturing company in Ghana, and an aluminum manufacturer in Panama. At least half of the projects will be in Sub-Saharan Africa.
Haydeé Celaya, IFC’s Private Equity and Investment Funds Director, said, "We are delighted to launch this facility to help an SME fund manager like Aureos. We look to our fund managers to invest in companies that are financially, environmentally, and socially sustainable, and this facility demonstrates our commitment to work with the Funds to make that possible."
The total cost of this initiative is $3 million, which will be funded by IFC and donor contributions.
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org or www.ifc.org/africa.
Aureos Capital is a manager of private equity funds that focuses on making investments in small and medium enterprises in emerging markets. Established in 2001, Aureos manages about $500 million in 10 funds throughout Africa, Asia, and Latin America, in addition to an investment portfolio initially made by the Commonwealth Development Corporation in South Asia, Sub-Saharan Africa, Central America, and the Pacific Islands. For more information, please visit www.aureos.com.
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