Equity Finance
IFC takes equity stakes in
private sector companies and other entities such as financial institutions, portfolio
and investment funds in developing countries. IFC is a long-term investor and
usually maintains equity investments for a period of 8 to 15 years. When the
time comes to sell, IFC prefers to exit by selling its shares through the
domestic stock market in a way that will benefit the enterprise, often in a
public offering.
IFC invest directly in companies’ equity, and also through private equity funds.
In FY11, equity investments accounted for nearly $2 billion of the commitment
IFC made for its own account.
To ensure the participation of other private investors, the Corporation
generally subscribes between 5 percent and 20 percent of a project's equity. We
encourage the companies we invest in to broaden share ownership through public
listing, thereby deepening local capital markets. We also invest through profit
participating loans, convertible loans, and preferred shares.
IFC's equity investments are based on project needs and anticipated returns.
The Corporation does not take an active role in company management.
IFC risks its own capital and does not accept government guarantees. However,
to meet national ownership requirements, IFC shareholdings can be treated as
domestic capital or local shares.
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