Private equity fund to finance SMEs
NDB Capital Holdings PLC and Zephyr Management launched the Emerald
Sri Lanka Fund, a US $ 50 million private equity fund to finance small
and medium enterprises (SMEs) in the country.
The fund will create a vibrant and sustainable SME sector and is an
integral part of overall funding in Sri Lanka. It will give tremendous
opportunities for SMEs to obtain funding. This sort of private equity is
important as the fund partners not only provide funding, but
intellectual capacity, NDB Capital Holdings, CEO Vajira Kulatilaka said.
The appetite for funding the eco system is far greater than the
Emerald Fund and there is ample room for more private equity funds in
This pioneering venture will bridge the gap between the promoters of
capital and SME needs, he said. The Emerald Sri Lanka Fund will invest
in significant minority positions of fast growing SMEs in the country.
The private equity model has facilitated in developing the SME sector
and is considered as one of the methods of accelerating a country’s
"Sri Lanka needs to maintain its strong growth momentum and the macro
economic indicators are heading in the right direction. However, the
missing ingredients are long-term capital and equity funding related to
SMEs," he said.
As the SME sector is an essential component of the country’s economy,
it is necessary to create long-term capital, with a low risk factor
which will help in creating job opportunities and income generation.The
fund will be of benefit to capital efficient businesses with sustainable
competitive advantages and having proved business models. The segments
that the fund targets are the export sector, process agri business, IT,
port services, construction, fast growing food business, healthcare and
building services as SMEs are considered the platform that the present
economic backbone is been built upon.The fund will focus on a consistent
investment approach centered on fast growing businesses with a focus on
value addition. It will develop exit strategies along with the
entrepreneurs either through an IPO or a trade sale.