The fund is expected to contribute to closing the gender financing gap.
IFC, a member of the World Bank Group, is investing US $ 26 million in the private equity fund L Catterton Latin America III (LCLA III), which will provide capital to medium-sized companies focused on the consumer sector in Latin America.
The fund will help stimulate job creation, increase market productivity, as well as support female entrepreneurship in the region.
LCLA III is managed by L Catterton, a global fund manager, and is mandated to invest in Latin America, with a specific focus on Brazil, Colombia, and Mexico. Latin America lags behind other emerging markets in gender diversity in private equity funds, with only 5 percent of female-owned investees, which is less than the meager 7% in other emerging markets , according to a recent IFC report.
The fund is expected to help close the gender financing gap, as many consumer companies in Latin America are led by women entrepreneurs.
L Catterton has set itself the goal of investing 20% in companies led or operated by women. “Lack of access to private equity financing is a key barrier to the growth of women-led companies,” said Georgina Baker, IFC Regional Vice President for Latin America and the Caribbean, Europe and Central Asia. “Supporting women-led businesses in Latin America will encourage others to understand the business case for greater gender diversity in private equity funds,” she said.
The fund has made its first transaction with a dental company in Brazil, which offers affordable services to low- and middle-income clients, and the business anticipates exponential growth in the next five years.
Investment in LCLA III includes $ 25 million from IFC funding and $ 1 million from the Women Entrepreneurs Funding Initiative (We-Fi), a partnership between 14 countries and multilateral banks seeking to leverage funding for enterprising women. By providing financing to private equity and venture capital, IFC can play a critical role in development, helping to build dynamic, job-creating businesses that drive prosperity, provide essential goods and services, and strengthen the middle class.
So far this fiscal year 2020, IFC has invested a total of $ 90 million in private equity and venture capital funds to support companies in Latin America.