SEF Central Asian Small Equity Investment Fund

completed

The fund will provide quasi-equity and equity financing, in combination with technical and managerial assistance, to growth-oriented Central Asian-owned SMEs. Operations will be conducted primarily from Almaty, Kazakhstan, with a branch office in Tashkent, Uzbekistan - satellite offices will be set up in Bishkek in Kyrgyz Republic, Dushanbe in Tajikistan, and Ashgabat in Turkmenistan as opportunities arise. The proposed project will be one of the few equity funds in the region and will be unique in addressing equity financing/venture capital for small businesses. Important impediments to the development of the SME sector in Central Asia are lack of access to equity capital, limited availability of long-term lending, and business managers’ insufficient business expertise and technical training. CASEF''s developmental impact is substantial in that it aims to alleviate these constraints by providing quasi-equity and equity capital, supplemented by appropriate technical assistance. Local commercial banks would be encouraged to lend to some of the investee companies since the Fund will provide the necessary capital base. The demonstration effect, particularly due to IFC''s involvement, is substantial, and is expected to help attract other equity investors in Central Asia. The project is consistent with efforts of the World Bank Group to support the growth of the private sector in the five Republics of Central Asia. This project is a pilot for channelling quasi-equity and equity investments to SMEs through a fund with a non-traditional, yet experienced manager in a difficult market.