Seattle, Washington — International Finance Corporation (IFC), the for-profit investment arm of the World Bank, has published its intent to invest up to US$13mn in Capria Fund, a new US$100mn “network fund” that actively invests in and partners with next generation impact fund managers in emerging markets. Through its work in Latin America, Africa, and Asia, Capria is looking to grow current network-wide assets under management (AUM) of US$260mn to more than US$1bn over the next two years, advancing a new model to address the US$1tn+ “missing middle” investment opportunity.
To this end, Capria recently added five new fund managers to the Capria Network, bringing the total to 16 managers eligible to receive investments from the Capria Fund after its first close, anticipated in August of 2018.
Sourcing and Supporting Trusted Intermediaries to Address the “Missing Middle”
Small and fast growing businesses (SGBs) in emerging markets face many challenges scaling up, starting with access to sufficient risk capital. They are typically too big for microfinance and informal local investors, and too small or too risky for banks, private equity firms, development finance institutions, and other direct investors. In addition, SGBs need local, capable value-add partners to help them succeed ‒ providing strong professional networks that include access to capital, deep experience in business execution, technical and sector expertise, and much more.
The Global Impact Investing Network (GIIN), recently reported an unprecedented growth in the size of impact investment portfolios of their members, doubling from US$114bn to US$228bn since mid 2017. However, without capable, value-added, trusted investment intermediaries to work in-country with SGBs day-to-day and week-to-week, there is no pathway for the growing sources of impact capital to profitably invest in this massive emerging market investment opportunity. This is where Capria’s network fund investment strategy is delivering a disruptive, innovative model enabling profitable deployment of billions of dollars into emerging market SGBs.
Catalyzing Capital Deployment to the Capria Network
Since 2015, Capria has been seeking out, partnering with, and making sub-US$1mn investments in local fund managers’ GPs (investment management firms) in emerging markets, with 16 managers in the Capria Network to date. As these managers’ efforts to bring new funds to market advance, they need anchor or lead investor support. After the first close of Capria’s second fund later this quarter, Capria will begin making commitments as a limited partner into the funds created across the Capria Network, with initial investments ranging from US$1mn up to US$5mn, and ultimately, after the fund’s final close, up to US$7mn.
Will Poole, co-Founder and Managing Partner of Capria said, “Capria’s continued engagement with IFC shows that we are on the right path and addressing some of the most pressing issues in profitable capital deployment in emerging markets. We will soon be able to announce a number of other leading family office and foundation investors joining our second Capria Fund, similar to how we worked with Jim Sorenson, Sall Family Foundation, Bill Gates, Mohandas Pai, Ceniarth, and others who supported Capria’s first fund.”
Experienced Managers Join Capria Network from Latin America and West Africa
Capria recently completed its 5th investment cycle, selecting and investing in the “GP” of 5 fund managers, collectively investing across Mexico and the major markets of South America as well as in multiple markets in West Africa. Of the 570 fund managers evaluated across the globe since 2015, only 16 managers have been chosen to join Capria’s highly qualified network. Over 100 funds applied to the 5th investment cycle, from which the following were selected:
- Adobe Capital – US$40mn investing smart money in smart solutions, in Mexico and Pacific Alliance Countries
- Capital Invent – US$75mn fostering prosperity through exceptional entrepreneurship in Mexico
- kap – US$60mn fueling financial innovation in frontier markets of Africa
- Prismapar Capital – US$40mn helping pioneers scale quality education in Latin America
- Terra Global Capital – US$40mn growing rural incomes, from soil to market, in Colombia
Next Step: First Close Followed Closely by Fund Commitments
Capria has now built a substantial pipeline of fund managers with whom they have been working in some cases over two years. With the Capria Fund’s first close coming in this quarter, Capria will be able to start making larger investment commitments to its partner funds in the Capria Network, totaling more than US$25mn in the six months following its first close.
“Our long-term goal is to profitably improve the lives of over 100 million people across Africa, Latin America, and Asia through smart capital invested through a global network of the top impact funds in emerging markets,” said Dave Richards, co-Founder and Managing Partner of Capria. “We’ll deliver this impact through Capria Network fund managers and the SGBs that they support by activating over US$5bn of global and local capital over the next few years to move us towards that goal.”
A complete list of the managers in Capria Network can be found at http://capria.vc/network.
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