On December 19, the Japan International Cooperation Agency (JICA) signed an agreement to invest US$10 million in the Dolma Impact Fund II, an impact investment fund managed by Dolma Fund Management (DFM). JICA’s investment will be used to invest in companies in the healthcare, IT and digital sectors, and renewable energy projects in Nepal and other developing regions. This project is a co-investment with the International Finance Corporation (IFC), the U.S. Development Finance Corporation (DFC), the British International Investment Corporation (BII), the Netherlands Development Finance Corporation (FMO), and Swedfund. JICA’s investment is part of the final close of the fund, which will bring the fund’s capital size to $71.96 million.
Although Nepal experienced a temporary economic recession due to the earthquake in 2015, the country has since recovered from the disaster and is expected to graduate from the Least Developed Country (LDC) status by 2026. However, the country has not developed a promising domestic industry, and the number of migrant workers going abroad has increased, hollowing out the domestic economy and creating a need to foster domestic industry. In addition, the country has abundant hydropower development potential with 42,000 MW of usable hydropower capacity, and it is expected to contribute to the reduction of greenhouse gas emissions in the South Asian region by promoting the development of renewable energy, mainly hydropower.
DFM operates an impact investment fund that supports industrial development, job creation, and the promotion of renewable energy in Nepal by investing in (1) healthcare companies, (2) IT and digital companies, and (3) renewable energy projects, and by providing technical cooperation to its portfolio companies. The company also invests in the stock market and private equity (PE) firms. In Nepal, where the stock market and private equity (PE) fund market are in their nascent stages, the fund managed by the company is expected to contribute to the further development of the country’s stock market and PE fund market by driving fund formation and PE investment activities. Furthermore, the fund intends to make impact investments that include a gender perspective, and the project is eligible for the “2X Challenge: Financing for Women” (*). By supporting DFM’s impact investment activities, this project will contribute to SDG Goal 5 (Achieve gender equality), Goal 7 (Energy for all and clean energy), and Goal 8 (Job satisfaction and economic growth).
JICA has been working to promote industry, renewable energy, and improve the investment environment in Nepal through yen loans and technical cooperation projects. Based on this support, JICA will support industrial development, promotion of renewable energy, and improvement of the investment environment in Nepal by further promoting impact investment activities by private companies in this project.
(*) 2X Challenge: Financing for Women: An initiative adopted by development finance institutions in each country, including JICA, at the G7 in June 2018. The 2X Challenge aims to double the volume and impact of investments in women. 2X has indicated a goal of doubling the volume and impact of investments in women.
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