WASHINGTON, D.C., May 31 -- The International
Finance Corporation (IFC) has approved an equity investment of up to FF
6 million (US$1.1 million equivalent) in the Madagascar Capital Development
Fund, the first foreign fund for investment in Madagascar. The fund, which
will have a life of 10 years, will take minority positions in export-oriented
companies in the recently established Malagasy export processing zone.
Initially, its capital will be FF 15 million (US$2.6 million equivalent).
It is expected that a second tranche, in an equal amount, will become available
for subscription in 1997. This "slow growth" approach will help
to ensure a high level of investment of the fund in export-oriented companies.
According to Tei Mante, Director of IFC's Sub-Saharan Africa Department,
the fund will help overcome a shortage of equity financing for companies
in Madagascar's successful and rapidly growing export processing zone.
The shortage, said Mr. Mante, "is particularly acute for local entrepreneurs;"
as a result,
many companies in the export processing zone are foreign-owned. Most of
the fund will be privately placed with long-term, venture-oriented international
institutional investors, as well as with industrial companies in the Indian
Ocean region. Its investments will be structured as equity holdings or
convertible debentures. The fund sponsor is Compagnie Financi╦re d'Epargne
et de Placements (CFEP), the investment banking arm of Banque R╚gionale
d'Escompte et de D╚p┘ts, a French commercial bank. CFEP will set up a wholly
owned subsidiary, Madagascar-Gestion, to administer and manage the fund.
IFC, a member of the World Bank Group, is the largest multilateral source
of financing for private sector projects in developing countries.