Mauritius-based BanyanTree Growth is set to launch its second fund, BanyanTree Growth Capital II, which will focus on the SME sector. The fund size will be $150-175 million, of which $25 million is expected to be infused by International Finance Corporation (IFC) for a 20 percent equity.
The fund will primarily make equity investment in fast growing SMEs, which could include IT, manufacturing and engineering sectors. These sectors are likely to have environmental and social concerns mainly around occupational health & safety, labour, air & water pollution and waste management. “BanyanTree’s core proposition centres around its ability to find companies that are growing and capital constrained but reluctant to dilute to the extent a traditional private equity financing would require. BanyanTree has positioned itself as a provider/arranger of hybrid capital based on the team’s long experience of structured finance,” according to the project document.
The proposed project is a successor fund to BanyanTree Growth Capital I (BanyanTree I), which raised about $100 million in 2008-09. It invested in eight companies with one partial exit.
According to the IFC, the fund’s ability to reach companies that would not ordinarily access PE capital on account of dilution fears makes their capital even more impactful.