Nepal-focused fund raises US$40 million in first close
FMO, CDC Group, Swedfund and IFC participate in Dolma Impact Fund II
11 May 2021 | The Asset

Dolma Fund Management has announced the first close of Dolma Impact Fund II (Dolma II), a private equity fund investing primarily in renewable energy, healthcare and technology in Nepal.

Investors in the US$40 million first close are FMO, a Dutch entrepreneurial development bank; CDC Group, a development finance institution and impact investor from the United Kingdom; Swedfund, a Swedish development finance institution; and the International Finance Corporation (IFC), a global development institution under the World Bank Group.  The final close is targeted at US$75 million.

As Covid-19 cases rise in Nepal, following the trend in India, Dolma II’s target sectors will directly address capacity constraints in healthcare and enable digital solutions to scale rapidly, which will be vital during and following the pandemic.

Nepal was one of the world’s fastest growing economies, achieving GDP growth rates of between 6.7% and 8.2% in 2017-2019, according to the World Bank. Even in 2020, the country outperformed its South Asian peers.

Dolma II is part of a shift towards increased foreign direct investment (FDI) in Nepal, a country with a population of almost 30 million. The fund follows the success of Dolma Impact Fund I (Dolma I) which pioneered institutional FDI and environmental and social standards from 2014 in the high-growth emerging market. Dolma I’s portfolio includes almost 50MW of renewable energy, some of the country’s leading artificial-intelligence and e-commerce firms, and much-needed pharmaceutical manufacturing and medical care.

Other foreign investment successes in Nepal include an internet service provider, mobile telco and hydropower projects, while long-established multinationals such as Standard Chartered, Unilever and Coca-Cola continue to thrive in the country. To further accelerate FDI, the Nepal Invests platform was launched last month by CDC, FMO and the Swiss Agency for Development and Cooperation (SDC).

Dolma Fund Management CEO Tim Gocher says: “Our second fund is an international vote of confidence in Nepal’s private sector and talent. Our first fund demonstrated the commercial and impact opportunities in Nepal. Dolma Impact Fund II is a big step to opening these opportunities to a broader set of foreign investors to whom impact is a priority.”

Jaap Reinking, director of private equity at FMO, adds: “As an anchor investor in Dolma Impact Fund I, we’re excited to invest in Dolma Fund Management’s second fund. Not only does this support our ambitions towards accelerating climate action, financial inclusion, and reducing inequalities, it also focuses on improving environmental and social conditions for many Nepalese workers and businesses. We are proud to support Dolma Fund Management as it will invest in the emerging tech sector and much-needed healthcare services and jobs in Nepal."

Dolma Impact Fund I and II target risk-adjusted market returns while their impact is aligned with Nepal’s sustainable development goals.