The Emerald Sri Lanka Fund will invest in small and mid-sized businesses seeking expansion capital in Sri Lanka. The Fund Manager, NDB Zephyr Partners, is jointly owned by NDB Capital Holdings PLC, one of the leading investment banking services provider in Sri Lanka, and Zephyr Management, LP, the New York-based global emerging markets investment firm.
NDB Zephyr believes that Sri Lanka provides excellent conditions for growth by small and mid-sized companies. These conditions include political stability, a rapidly growing economy and an educated labor force. Sri Lankan SMEs currently have limited equity raising options until an IPO. However, many SMEs are not ready for an IPO, due to their small size, lack of management depth and inadequate governance.
NDB Zephyr will assist its portfolio companies in areas such as strategic planning, management development, financial management, corporate governance and operational efficiencies. The Fund Manager will also help the portfolio companies in accessing international markets and optimizing their capital structures. Exits will be generated via the IPO market or through trade sales to domestic or international buyers.
The Fund will be the largest private equity fund dedicated for Sri Lanka and seeks to make investments, generally in the range of USD$2 million to USD$6 million, in equity and equity-linked securities in fast-growing small and medium-sized enterprises in Sri Lanka. The Fund will generally seek significant minority stakes and will target companies that are positioned to benefit from scale achieved through regional/global market penetration or increasing domestic consumption.
The investment team will draw on the capabilities and experience of the Manager’s parent companies, NDB Capital and Zephyr Management, L.P. The Fund’s investment team will benefit from NDB Capital’s deep understanding and experience in the Sri Lankan market. Zephyr Management will provide the Emerald investment team with expertise regarding the investment process, including deal evaluation, portfolio management and exits.
The Fund size is expected to be approximately US$ 50 million. The Fund’s investors include some of the most experienced investors in the emerging markets including the International Finance Corporation (IFC), Deutsche Investitions- und Entwicklungsgesellschaft (DEG) and Netherlands Development Finance Company (FMO).
Rajendra Theagarajah, CEO of NDB Group said “NDB is pleased to take the leadership role in the launch of the Sri Lanka dedicated private equity fund. We believe that the launch of the Emerald Fund will help facilitate the emergence of a new industry that will serve many Sri Lankan companies in the years to come”
Thomas Barry, Founder and CEO of Zephyr Management stated “We are excited about our participation in the first institutional private equity fund in Sri Lanka. NDB’s strong reputation and experience in the Sri Lanka capital markets will provide the Fund’s investment team with much needed local experience, knowledge and relationships’.
“Emerald Fund will bridge a long felt gap for equity funding for Sri Lankan SMEs. The Fund will benefit tremendously from Zephyr Management’s global networks and expertise in the private equity investment process” commented Vajira Kulatilaka of NDB Capital.