DFC can provide direct equity into projects in the developing world which will have developmental impact or advance U.S. foreign policy. An equity investment can be particularly important when operating in credit constrained environments or early stage companies. DFC's ability to make equity investments will allow to play a catalytic role in mobilizing private sector capital on behalf of U.S. interests abroad.
DFC-supported funds help address the shortfall of private equity capital in developing countries and help these economies access long-term growth capital, management skills, and financial expertise, all of which are key factors in expanding economic development and creating new opportunities for people in low-income and developing nations.
How the Investment Funds Process Works
A selection committee comprised of an internal DFC team and an independent private equity consultant conducts extensive manager evaluations. All applications that meet the published selection criteria will be considered.
Evaluation of prospective fund managers considers the following criteria:
- Viability and thoughtfulness of the proposal; consistency and clarity of the investment thesis, value creation strategy, and proposed exit strategies
- Demonstration of how the proposed fund and its investments may have a positive developmental impact on the host country/countries in areas including, but not limited to: job creation, infrastructure improvements, social policies and corporate social responsibility initiatives, as well as technology and knowledge transfer
- Ability of the fund manager to comply with DFC’s policies related to environmental and social sustainability as well as respect for human and worker rights
- Ability of the fund manager to raise sufficient equity capital to close the proposed fund in a reasonable amount of time
- Relevant track record of the prospective management team making long-term risk investments in emerging markets, and the team’s country or regional experience
- Experience, depth, credibility, and cohesiveness of the fund management team and its experience managing third party capital
An Evaluation Committee comprised of DFC staff and assisted by the advisors will determine which applicants are selected for further consideration based on their initial application.
Those fund managers not selected to move forward in the process will be notified by DFC. The selection process is extremely competitive, and DFC receives proposals from many highly-qualified managers. Regrettably, DFC does not have the capacity to support all of the worthy funds that apply.