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 FY12, equity investments accounted for nearly $2.3 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.