According to the Bank’s website, IFC proposes an equity investment of up to US$60 million and an additional co-investment envelope of up to US$60 million under the delegated authority framework, in India Business Excellence Fund V G (IBEF V or the Fund), a private equity (PE) fund focused on providing growth capital to mid-market companies in India across (i) consumer; (ii) financial services; (iii) life sciences; and (iv) manufacturing, and together with India Business Excellence Fund V (Master Fund) is targeting US$750 million in total commitments. The Fund is expected to size its average ticket per company in the range of US$60 million in 12-16 companies.

The Fund is expected to increase access to PE capital and value creation for mid-market companies in India. The Fund’s business model is also differentiated in recognizing the significant growth potential of extending services to Low Income States (LIS) of India. Motilal will continue its strategy of targeting a material share of Fund V investees operating in LIS. Motilal aims to provide value creation to its portfolio companies through improved corporate governance and leadership development, while leveraging its parent entity’s market research, sector experts, and networks to generate revenue growth for its investees. Beyond the Project, IFC’s support to the Fund Manager to scale and expand the exposure of commercial investors to investments in LIS is expected to signal the viability of a PE model that includes investments in these regions. In turn, encouraging other local fund managers to raise new or follow-on funds that include investments in LIS and attract greater commercial institutional investors into the segment.

The key sectors that the Fund will invest includes (i) consumer; (ii) financial services; (iii) life sciences; and (iv) manufacturing The Fund will not invest in higher E&S risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage d) significant occupational health and safety risks and e) risk of retrenchment. The fund will also not invest in any coal-related activities, activities on the IFC Exclusion List, or any financial institution exposed to high-risk sectors. Hence, the E&S risk of the proposed investment is medium, and the project is categorized as FI-2 according to IFC’s Policy on Environmental and Social Sustainability. The main E&S risks and impacts of the project derive from the E&S risks associated with the fund's investee companies and their E&S capacity and systems in place to manage those risks as well as the fund manager’s capacity to adequately assess E&S risks, require corrective actions where needed, and monitor their implementation. Most of the environmental and social risks and impacts of these industry sectors will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures and good industry practices. The typical risks areas will include labor and working conditions, occupational health and safety, gender-based violence and harassment (GBVH), supply chain risk, air emissions, waste management, handling of hazardous materials, and management of third party/contractors. 

 The Fund, together with the Master Fund, is seeking to raise US$750 million in aggregate capital commitments. IFC proposes an equity investment of up to US$60 million in the Fund (capped at 19.99% of the total commitments in the Fund and Master Fund). Additionally, a delegated authority co-investment envelope of an amount of up to US$60 million in potential co-investments in the Fund’s portfolio companies is being proposed alongside the Fund commitment.

The Fund will be managed by MO Alternative IFSC Private Limited (Motilal or the Fund Manager), a private limited company domiciled in India. The Master Fund will be managed by MO Alternate Investment Advisors Private Limited which is led by Vishal Tulsyan and Raamdeo Agrawal.

MO Alternative IFSC Private Limited
Bharat Kedia
Chief Operating Officer

bharat.kedia@motilaloswal.com

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