NEW DELHI, INDIA, November 3, 1998
— The International Finance Corporation will invest in India's rapidly
growing and evolving auto ancillary sector that supplies the automotive
industry, through the India Auto Ancillary Fund, a private equity fund
with a targeted capital of US$30 million.
The auto ancillary sector – which includes components and sub-systems
for automobile assembly – has grown rapidly since the Indian automotive
industry was liberalized in 1991. It is now undergoing major structural
change as international companies compete on the Indian market and new
technologies are brought on stream. There is a process of consolidation
underway among some 500 automotive ancillary firms and another 3,000 businesses
that supply the auto industry in the informal sector.
This new business environment in India provides excellent investment opportunities
for the fund, according to Rashad Kaldany, IFC's Director for South and
Southeast Asia. He said that the fund would bring technological and
engineering development, especially for smaller companies involved in auto
ancillary production. The fund is likely to invest in about 10 to
12 companies, he said.
On Oct. 26, IFC signed the first closing of the India Auto Ancillary Fund
which is a closed-end 8-year private equity fund. IFC will invest
up to 15 percent of the total value of the fund, which is being promoted
by Infrastructure Leasing and Financial Services (IL & FS), a leading
Indian financial institution that commercially develops and finances infrastructure
services. Other investors include DEG-Deutsche Investitions und Entwicklungsgesellschaft
(the German development agency), Nissho Iwai, the Tamilnadhu Industrial
Development Corporation, Bank of India, and Mahindras. The fund will
be managed by IL & FS Venture Corporation Limited (IVC), which manages
venture capital and private equity funds.
IFC, part of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets, and providing technical assistance and
advice to governments and businesses.