 "IFC eyes investment fund scheme for women")
International Finance Corporation (IFC), the World Bank's investment arm, has said that it is considering a women's investment fund programme that would seek to invest in women-owned businesses globally through private equity funds, according to a new report of the corporation. One of the main focus countries will be India.
IFC, which has been helping SMEs through loans and equity infusions, works broadly across the financial spectrum. This includes investing a total of about $500 million a year in private equity funds that back local firms which do not trade on any stock exchange.
The corporation targets three kinds of funds - including growth equity funds that target fast-growing smaller and mid-size companies with good prospects for eventually going public or being bought out; small business funds that provide capital and advice to SMEs in frontier countries or regions that growth equity funds find difficult to access; and finally through venture capital funds for smaller, earlier-stage companies based around either new intellectual property or new business models.
Besides, entrepreneurs are opening up their shareholding structure to outside investors, which then play an essential behind-the-scenes role in strengthening their privately-held firms in ways that bring widespread benefits. This is particularly valuable in many developing countries where risk capital is scarce and institutional capacity is weak, according to IFC.
With these successes, IFC is now considering a women's investment fund programme that would seek to invest in women-owned businesses globally through private equity funds. The programme would help SMEs in India and Africa and mid-cap companies in Southeast Asia. The quantum of the fund has not been disclosed in the report, which states that working through experienced fund managers with regional and corporate banking experience would also help improve corporate governance and train women entrepreneurs to grow their companies and create more jobs.
IFC's 'Banking on Women' programme supports access to finance and builds technical capacity for women through global and regional financial institutions.
"The goal is contributing to the development of women-owned businesses as a sub-asset class in their own right, and encouraging more investors to look at investments through a gender lens," said the corporation in its report.
Women entrepreneurs are changing the face of the global economy, helping sustain job creation and economic growth. "In fact, women represent the largest emerging market," says IFC.
It is estimated that women-owned entities represent over 30 per cent of registered businesses worldwide, and according to the Harvard Business Review, women control about $20 trillion in global consumer spending. That's a growth market bigger than India and China combined, and is projected to reach $28 trillion by 2014, said IFC.
But, women, who already face societal and cultural barriers, also find it more difficult than men to gain access to finance. Women entrepreneurs, says IFC, face a special dilemma in the poorest, most conflict-affected countries, where microfinance abounds, but private equity is largely unknown.
"They drive job creation and economic growth, but are stuck in the middle: too big for microfinance, too small for commercial banks, and having few ways to build the management skills or industry knowledge they need to grow," the corporation's report says.
Empowerment of women is one of the most effective ways to reduce inequality and facilitate economic growth, says IFC, adding that developing countries cannot achieve sustainable growth without the active participation of women.
IFC, which has been helping SMEs through loans and equity infusions, works broadly across the financial spectrum. This includes investing a total of about $500 million a year in private equity funds that back local firms which do not trade on any stock exchange.
The corporation targets three kinds of funds - including growth equity funds that target fast-growing smaller and mid-size companies with good prospects for eventually going public or being bought out; small business funds that provide capital and advice to SMEs in frontier countries or regions that growth equity funds find difficult to access; and finally through venture capital funds for smaller, earlier-stage companies based around either new intellectual property or new business models.
More From This Section
IFC says the average growth rate of job creation in IFC-supported funds since 2000 has been 15 per cent across the portfolio, well in advance of regional rates of job growth of two to three per cent. While small companies have the highest rates of job growth (around 18 per cent), it is the mid-size companies with more than 300 employees at the time of entry that create the largest number of jobs. This is why IFC's portfolio focuses on growth equity funds, which have the greatest opportunity for job creation and sustained growth.
Besides, entrepreneurs are opening up their shareholding structure to outside investors, which then play an essential behind-the-scenes role in strengthening their privately-held firms in ways that bring widespread benefits. This is particularly valuable in many developing countries where risk capital is scarce and institutional capacity is weak, according to IFC.
With these successes, IFC is now considering a women's investment fund programme that would seek to invest in women-owned businesses globally through private equity funds. The programme would help SMEs in India and Africa and mid-cap companies in Southeast Asia. The quantum of the fund has not been disclosed in the report, which states that working through experienced fund managers with regional and corporate banking experience would also help improve corporate governance and train women entrepreneurs to grow their companies and create more jobs.
IFC's 'Banking on Women' programme supports access to finance and builds technical capacity for women through global and regional financial institutions.
"The goal is contributing to the development of women-owned businesses as a sub-asset class in their own right, and encouraging more investors to look at investments through a gender lens," said the corporation in its report.
Women entrepreneurs are changing the face of the global economy, helping sustain job creation and economic growth. "In fact, women represent the largest emerging market," says IFC.
It is estimated that women-owned entities represent over 30 per cent of registered businesses worldwide, and according to the Harvard Business Review, women control about $20 trillion in global consumer spending. That's a growth market bigger than India and China combined, and is projected to reach $28 trillion by 2014, said IFC.
But, women, who already face societal and cultural barriers, also find it more difficult than men to gain access to finance. Women entrepreneurs, says IFC, face a special dilemma in the poorest, most conflict-affected countries, where microfinance abounds, but private equity is largely unknown.
"They drive job creation and economic growth, but are stuck in the middle: too big for microfinance, too small for commercial banks, and having few ways to build the management skills or industry knowledge they need to grow," the corporation's report says.
Empowerment of women is one of the most effective ways to reduce inequality and facilitate economic growth, says IFC, adding that developing countries cannot achieve sustainable growth without the active participation of women.