COLOMBO: Sri Lanka launched Emerald Sri Lanka Fund, a private equity fund, targeting a 50 million US dollar fund which will provide financing to small and medium enterprises in Sri Lanka that has strong growth potential, an official said.
The fund will be run NDB Zephyr Partners, a joint venture between by New York based Zephyr Management and Colombo base NDB Bank group.
Vajira Kulatilaka, Chief Executive of NDB Capital Holdings PLC that said Without equity the companies cannot grow 20 to 30 percent. The fund will invest in small and mid-sized businesses seeking growth.
He said that If you are growing at 10 percent what will happen is that you will have go for internal cash generation and loans to but at a lower growth trajectory. But if you want to grow at a higher trajectory you need an equity base. And that equity base is not here.
In Sri Lanka, unless you go for an IPO, there is no way for a company or a SME can get equity in this country. Pointing out an example of Face book, a social media network, Kulatilaka said that the company (Facebook ) had injected private equity several times before proceeding to an IPO.FaceBook grew from 0.5 million dollars in 2004 and went for a 16 billion dollars IPO in 2012.
“The first few investments were done by angle investors. Then it was venture capital. Lastly there was many stages of private equity placements before going to an IPO,” Kulatilaka said.
The fund plans to make an investments in the range of two million US dollars to six million US dollars in equity and equity linked securities in small and medium sized enterprises in the island.
It is estimated 75 percent of all enterprises fall into the SME category in Sri Lanka and 45 percent of country’s employment represent by SME’s.
