IFC Commits $60 Million to Motilal Oswal Alternates Fund to Help Mid-Market Firms Expand

IFC, a member of the World Bank Group, on Monday signed an agreement to invest $60 million (about Rs 510 cr) in Motilal Oswal Alternates to help mid-market companies in India expand and create jobs in sectors such as consumer, financial services, life sciences, and manufacturing.

International Finance Corporation (IFC) is making a $60 million equity investment in India Business Excellence Fund V G, which is managed by Motilal Oswal Alternates, the private investment arm of financial services conglomerate Motilal Oswal Financial Services Ltd, a joint statement said.

IFC's investment in the fund will be made along with an additional $60 million co-investment envelope that will allow IFC to selectively invest alongside the fund in future deals, it said.

The fund, with a target size of $750 million (with an additional greenshoe option of $150 million) will identify and support 12-16 mid-market companies with high growth potential, especially companies that can extend services beyond India's major cities to low-income states, it said.

The organisation invests in private equity funds to help entrepreneurs and the private sector in emerging markets access growth capital, create jobs, drive innovation, and boost market competitiveness, IFC vice president (Industries) Mohamed Gouled said.

"IFC's investment aims to leverage private capital and solutions to boost job creation, promote inclusive and sustainable growth, and support India's transition to a higher middle-income country. It's critical to provide capital to companies in this mid-market segment to help India maintain economic growth to absorb additional employment and equitable access to opportunities," he said.

This is IFC's third fund engagement with Motilal, after investing $25 million in its second and $35 million in its fourth fund.

According to Motilal Oswal Alternates MD and CEO Vishal Tulsyan, IFC's investment in the fund sends a powerful signal to other investors, especially institutional investors, to invest in India.

"This will also encourage other local fund managers to raise funds that include investments in underserved regions and attract greater commercial institutional investors into the segment, thereby enabling upward mobility and livelihood enhancement in the region," he said.

Mid-market companies play a crucial role in India's economic development, but they often lack access to formal credit, especially during economic downturns, the statement said.

Increasingly, private equity is helping address the funding gap by providing capital and management expertise to help the companies expand, create jobs, and strengthen financial sustainability.

PE-funded companies tend to grow faster, create significantly more employment, and pay more taxes than comparable companies with no PE funding, it added.