DFIs help Nepal impact fund to $40m first close

They include Netherlands-based FMO, UK-based CDC Group, Sweden's Swedfund, and the International Finance Corporation (IFC). It comes within weeks of FMO and CDC launching market building platform called Nepal Invests alongside the Swiss Agency for Development and Cooperation (SDC).

Dolma's first fund, including a top-up vehicle, raised $36.6 million in 2018 with strong support from European DFIs, including FMO, and was said to be the first international PE fund purely focused on Nepal. It focused on industrial, infrastructural, and essential services such as Swet Ganga Hydropower & Construction, although there were also deployments in areas such as e-commerce and artificial intelligence.

Dolma Impact Fund II will target primarily renewable energy, healthcare, education, and technology companies. Dolma described its timing as important, noting that COVID-19 cases in Nepal were spiking, following a trend in India. The new fund's target sectors have been set to directly address capacity constraints in healthcare and enable digital solutions to scale rapidly both during and following the pandemic.

Dolma's commitment to the US's sustainable development goals (SDGs) was instrumental in securing DFI support. Specifically, the firm has targeted SDGs related to gender equality, clean energy, climate action, industrialization to foster innovation, and reducing inequality in the workplace as well as between countries.

Fund I's renewable energy portfolio is expected to offset 219,000 tonnes of CO2 emissions a year. Further reducing polluting emissions in Dolma II is a priority as the Himalayan glaciers are set to lose two-thirds of their mass threatening the 600 million with flooding.

"Private equity funds can be an important source of capital and expertise for local entrepreneurs in Nepal – particularly in allowing them to expand their businesses, create more jobs, and provide essential goods and services," Babacar Faye, IFC's resident representative in Nepal said in a statement. "[W]e hope that this will have a demonstration effect, beyond the financial returns, and attract more investments."

IFC participated in the initial organization of Nepal Invests last year before it was formally launched by CDC, FMO and SDC. The platform aims to support foreign direct investment by providing flexible capital, partnering with other development banks, and promoting local entrepreneurs and private innovation activities.

CDC, which hired its first country head for Nepal last year, made its first investment in the country in 2019 with a $15 million commitment to NMB Bank, a leading local lender with more than 100 branch locations. NMB has previously received multiple funding rounds from FMO and was backed by IFC in 2020.

Earlier this week, the OPEC Fund, an Austria-headquartered entity representing the Organization of the Petroleum Exporting Countries, extended a $15 million loan to NMB to support micro businesses and renewable energy projects. OPEC fund described the investment as targeting SDGs related to clean energy, infrastructure, and reducing poverty.

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• Topics
• South Asia
• Fundraising
• Growth
• Nepal
• development finance institution
• FMO
• CDC Group
• IFC
• Impact investment