IIC Approves Equity Investment In Colombia’S Fondo Escala Capital, FCP
09/28/2009Fondo Escala Capital will invest to support the expansion of Colombian-owned private enterprises.
Washington, D.C. On September 29, 2009, the Inter-American Investment Corporation (IIC) approved an equity investment of up to US$2,750,000 in Fondo Escala Capital, FCP. Fondo Escala Capital is a non-leveraged multisector emerging market closed private equity investment fund. The IIC will sell a participation of 50% of its investment to the China-IIC SME Equity Investment Trust Fund.
Fondo Escala Capital will make equity investments in Colombian enterprises with annual sales in local currency between the equivalent of US$2.5 million and US$30 million, approximately. It will focus on enterprises with annual sales in local currency between the equivalent of US$7.5 million and US$20 million, approximately. The IIC’s investment is estimated to represent 6.2% of Fondo Escala Capital’s total equity.
The IIC’s investment in this sector in Colombia at this juncture is timely for achieving a demonstration effect. It reflects the IIC’s support for Colombia’s incipient private equity industry and identifies that industry as one of the relevant forces for fostering entrepreneurship in Latin America, as has already been shown in countries such as Brazil, Chile, and Mexico. The IIC’s investment will also enhance Fondo Escala Capital’s development impact by introducing appropriate environmental management and labor review procedures and guidelines and making it possible to invest in smaller companies.
Fondo Escala Capital is organized under Decree Nº 2175 enacted by the Colombian government in June 2007. The enactment of a decree to regulate and establish oversight mechanisms demonstrates the government’s willingness to support the sound growth of the private equity industry.
The IIC is a multilateral financial institution that is a member of the Inter-American Development Bank (IDB) Group. It provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. In 2008, the IIC reached US$1.5 billion in assets and approved sixty-four operations channeling US$300.5 million to SMEs in the region. The IIC’s mission is to promote the economic development of its regional member countries by encouraging the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC’s activities, please visit www.iic.int.
Contact: Tomás Bermúdez (in Washington D.C.)
Telephone: (202) 623-1933