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The IFC, the private sector arm of the World Bank Group, plans to invest US$15 million and provide technical support in the ongoing second round of funding for Portland Caribbean Fund III, managed by Portland Private Equity.
The IFC investment would form a key component in attracting other institutional investors, on a path towards raising US$350 million overall for Fund III. PPE is chaired by Canadian-Jamaican businessman Michael Lee-Chin.
“IFC’s support with US$15 million equity will help the fund reach its final close target size of $350 million,” stated the fund in a disclosure earlier this month posted under PCF III Cayman.
Fund III will seek to invest in 10 to 12 entities, with “ticket sizes” ranging from US$15 million to US$30 million, and will seek to deploy at least 80 per cent of its invested capital in the Caribbean, with the balance split between Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.
Fund III will focus on investing in scalable services including financial services, food and hospitality, data centres and internet service business; communications such as networks, communication towers, internet and mobile networks; essential services, such as renewable energy and digital transformation providers, and agribusiness investments.
IFC was also a backer of Portland Caribbean Fund II a decade ago. It noted that its involvement in Fund III “assures investors” of the fund’s adherence to international standards and risk mitigation, drawing on its experience investing in the targeted emerging markets.
“IFC’s continued participation in the final close as a global institutional investor will give comfort to other investors considering entering the fund together with IFC during final close,” it said.
Potential new investors include FinDev Canada, Corporación Andina de Fomento and the Netherlands Development Finance Company, and the US International Development Finance Corporation.
Last November, the fund raised US$100 million for its first round of funding. It was supported by the European Investment Bank, Caribbean Development Bank, IDB Invest of the Inter-American Development Bank, according to the disclosure. Other investors in the first round included Jamaican pensions and family offices, it added. The EIB acted as a key investor in the first phase. The commitment by the bank, which is ultimately owned by member states of the European Union, played a “catalytic role” in attracting other investors to reach the fund’s first close, the EIB said at the time in making the announcement.
EIB will invest up to US$35 million in Fund III. It’s already put up US$25 million during the first fundaising round, with the balance committed to the current and ongoing second round.
EIB rules limit investments in funds to 25 per cent of the fundraise. The IFC proposed investment is capped at 20 per cent of the total fundraise.
Overall, there is minimal activity in private equity fundraising in the Caribbean, with no new funds emerging since Portland’s Fund II a decade ago, the IFC noted. Within the broader region, a fund a fund in Colombia raised US$20 million, it added.
The technical support that IFC will offer to the Fund III pertains to improving the gender diversity of both its investment team and portfolio companies.
“Including increasing women’s representation in the investment committee and leadership of portfolio companies; implementing sex – disaggregated reporting; developing internal mechanism and targets for women’s employment advancement and implementing equal opportunity policies; and working with portfolio companies to establish gender-smart policies,” the agency said.
Fund III will invest in small and mid-size high-growth companies across the Caribbean. Its target is businesses in the financial, communications, consumer, and hospitality sectors. Businesses run or owned by women will be prioritised.
Portland Private Equity has previously injected a total of US$405 million into regional investments through Caribbean Fund I and Fund II.
The life of Caribbean Fund II, which deployed US$250 million of investments, should come to an end this year but, due to the current status of the capital markets, securing exits from the investments have been difficult. The fund’s rules allow for a limited extension beyond 2024.
Caribbean Fund I directed US$225 million towards various investments, including Advantage General Insurance Company, telecommunications services providers Columbus International, construction firm Moya, beachfront development Las Olas, energy provider InterEnergy Holdings, and the soya bean enterprise World Food.
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