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The Fund Manager, NDB Zephyr Partners, is jointly owned by NDB Capital Holdings Plc (60%), one of the leading investment banking services provider in Sri Lanka, and 40% Zephyr Management LP, the New York-based global emerging markets investment firm. Since its inception, Zephyr has sponsored twenty-two investment funds across the developed and developing world and is actively researching new investment opportunities around the world.
IFC has previously worked with Zephyr to float three funds - each in India, Africa and Mexico.
The fund seeks to make investments, generally in the range of $ 2 million to $ 6 million, in equity and equity-linked securities in fast-growing small and medium-sized enterprises in Sri Lanka.
The fund will generally seek significant minority stakes and target companies that are positioned to benefit from scale achieved through regional/global market penetration or increasing domestic consumption.
NDB Zephyr believes that Sri Lanka provides excellent conditions for growth of small and mid-sized companies. These conditions include political stability, a rapidly growing economy and an educated labour force.
Sri Lankan SMEs currently have limited equity raising options until an IPO. However, many SMEs are not ready for an IPO, due to their small size, lack of management depth and inadequate governance.
NDB Zephyr will assist its portfolio companies in areas such as strategic planning, management development, financial management, corporate governance and operational efficiencies.
The fund manager will also help the portfolio companies in accessing international markets and optimising their capital structures. Exits will be generated via the IPO market or through trade sales to domestic or international buyers.
The investment team will draw on the capabilities and experience of the manager’s parent companies, NDB Capital and Zephyr Management, L.P.
The fund’s investment team will benefit from NDB Capital’s deep understanding and experience in the Sri Lankan market. Zephyr Management will provide the Emerald investment team with expertise regarding the investment process, including deal evaluation, portfolio management and exits.
NDB Group CEO Rajendra Theagarajah said: “NDB is pleased to take the leadership role in the launch of this Sri Lanka dedicated private equity fund. We believe that the launch of the Emerald Fund will help facilitate the emergence of a new industry which will serve many Sri Lankan companies in the years to come.”
Thomas Barry, Founder and CEO of Zephyr Management, stated: “We are excited about our participation in the first institutional private equity fund in Sri Lanka. NDB’s strong reputation and experience in Sri Lankan capital markets will provide the fund’s investment team with much-needed local experience, knowledge and relationships.”
“Private equity funds like the Emerald Sri Lanka Fund provide much-needed risk capital for small and medium-sized businesses,” said IFC Country Manager for Sri Lanka and Maldives, Adam Sack. “The fund will support entrepreneurship, job creation and contribute to economic growth.”
“IFC is excited about our partnership with NDB and Zephyr. It puts us at the forefront of developing the private equity ecosystem in Sri Lanka,” said Atul Mehta, IFC Global Director for Telecom, Media, Technology, Private Equity Funds and Venture Investing.
“DEG is pleased to be investing in the Emerald Sri Lanka Fund to provide support for SMEs in Sri Lanka. The fund will improve access to urgently required investment capital, enabling the companies to unleash their potential, thereby contributing to economic growth and job creation,” said Matthias Goulnik, Vice President Asia, at DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH.
FMO Chief Investment Officer Linda Broekhuizen mentioned: “This first time fund is a true partnership combining the strongest skills of Sri Lankan bank NDB, international established PE house Zephyr and the Development Finance Institutions offering Sri Lankan people many new jobs by growing with local entrepreneurs.”
Emerald Fund will bridge a long felt gap for equity funding for Sri Lankan SMEs. The fund will benefit tremendously from Zephyr Management’s global networks and expertise in the private equity investment process,” commented Vajira Kulatilaka of NDB Capital.
Senaka Kakiriwaragodage and Karthik Bhat will be the Managing Directors of the fund manager. Prior to his new role, Senaka was Vice President and Head of Capital markets at NDB Investment Bank (NDBIB) and has ten years of investment banking experience at NDBIB. Prior to joining NDBIB he worked as a software engineer at Virtusa Inc., a US-headquartered IT Services Company for two years. He is an Associate Member of the Chartered Institute of Management Accountants, UK and holds an MBA with Distinction from the University of Manchester, UK and a BSc First Class Honours degree from the University of Moratuwa. He is also a CFA Charterholder.
Karthik Bhat is Vice President and a member of the Zephyr Peacock (Zephyr management L.P’s India Funds) Investment team. Karthik has ten years of work experience in financial services including investment research and business advisory services. Prior to joining Zephyr Peacock, he worked at Goldman Sachs investment research for more than four years. Prior to Goldman, Karthik was at Deloitte Haskins and Sells, where he was involved in engagements in assurance, taxation and business advisory services. Karthik is a Chartered Accountant and holds an MBA from the Indian School of Business Hyderabad. He has also completed CFA Level 3 from the US CFA Institute.
