British International Investment

Dolma Impact Fund II

NepalSouth AsiaCommunications & IT servicesConsumer - HealthConsumer - other servicesInfrastructureManufacturing

Dolma Impact Fund II invests primarily in renewable energy, healthcare and technology in Nepal.

Our investment

Description of the investment.

This investment aims to build the private equity ecosystem in Nepal, which can in turn support private sector development and deliver large scale economic opportunities and quality of life improvement for people in Nepal. While we recognise that this will take many successes and multiple interventions, Dolma’s success can be a signal to others and help build a much-needed track record as well as human capital in this space.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Provide income-generating opportunities through direct and indirect job creation (SDG 8.5).
  • Improve the quality of life through access to goods and services, including clean energy (SDG 7.1 and 7.B), healthcare (SDG 3.8) and ICT (SDG 9.3).

How?

Primary Secondary
  • Catalysing markets. By building domestic private equity experience and human capital, and by delivering a sound commercial performance, the fund can support the development of the private equity industry in Nepal. A more developed ecosystem would help address the financing gap that constrains private sector development which can unlock both economic opportunities and improved access to goods and services. Repeated positive commercial returns will, in the long-term, attract other funds and investors to the market. Signposts of success include 1) sound commercial performance 2) raise of a follow-on fund and 3) in the next 5-10 years- a material increase in private equity activity in Nepal (both by local and regional investors). Achieving this will be supported by our market shaping technical assistance strategy under the Nepal Accelerating Investment Programme (NAIP), funded by BII Plus.
  • Direct: By investing in and providing value addition to 7-10 SMEs and energy (hydro/solar) projects, enabling their growth and construction. This will result in direct job creation and increased access to goods and services.

Who?

Stakeholder Geography Characteristics
Employees

Nepal

For Fund I, 80 per cent of employees are temp/contract workers, 62 per cent are under 25 years, 28 per cent are women; 95 per cent are skilled. The market effect would positively impact the broader labour force, which is currently primarily employed in informal (84 per cent) and low skilled activities.

Consumers

Nepal

Variable but likely to primarily reach the rising middle class, primarily in urban/well-connected regions. Further investments in this sector could increasingly reach the broader population. 30 per cent of people do not have access to electricity.

How much?

Scale Depth/Duration
  • Catalytic: A more developed private equity market would have a large-scale impact on the entire country.
  • Direct: Based on track record, we expect the fund to create 3,000 jobs over its lifetime.
  • Direct: The fund seeks to work with companies that aim to improve job quality for workers.
  • Catalytic: We expect the demonstration effect to materialise likely in 5-10 years or longer.

Contribution/additionality

Contribution/additionality
  • Financial additionality: Limited access to commercial private capital and our investment is critical to the fund achieving a viable first close and getting other investors onboard.
  • Value additionality: Our support will help the fund improve the governance of platform, fundraising, and its environmental, social and governance; business integrity; and development impact standards

Risk

Execution Risk
  • the failure to grow the businesses and deliver returns will affect ability to deliver impact and deliver returns.
Alignment Risk
  • Relates to the risk that capital is allocated to internationally domiciled technology companies that currently have a footprint in Nepal but may not have so in the future as companies scale.
Evidence Risk
  • Relates to the likelihood of insufficient evidence linking our investment to the desired demonstration effect we hope to create.

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed actions with the fund manager to build internal capacity to manage environmental and social risks in their portfolio, and which should also contribute to a more consistent implementation of their ESMS. Further areas of capacity building focus include portfolio monitoring and occupational health and safety.

Environmental and social risk

Medium-High

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    Last updated

    When the last quarterly update of the website database occurred.

    :
    March 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D4265
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    South Asia
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Communications & IT services, Consumer - Health, Consumer - other services, Infrastructure, Manufacturing

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Fund
    Start date :
    December 2022
    Amount :
    $4.25m
    Currency of investment :
    USD
    Fund Manager:
    Dolma Fund Management
    Domicile

    The company or investment fund’s place of incorporation.

    :
    Mauritius
    2X Gender Finance

    Indicates whether the investment is ‘2X qualified’ using the 2X Challenge criteria. You can find out more here. It only applies to investments made from 2018 onwards, when the 2X Challenge was first launched.

    :
    Fully qualified

Related investments made by BII into this fund:

Investment name Commitment Region Sector Start date Status
Investment 01 $10m South Asia Communications & IT services, Consumer - Health, Consumer - other services, Infrastructure, Manufacturing May 2021 Active

Investments made by this fund into companies:

For further information about these companies, visit https://www.dolmaimpact.com/dolma-fund-management-board.php

Investment name Country Region Sector Start date Status
Chirayu Hospital Nepal South Asia Consumer - Health June 2023 Active
Foodmandu Pvt. Ltd Nepal South Asia Consumer - other services March 2023 Active
Setikhola Hydropower Pvt. Ltd Nepal South Asia Infrastructure April 2023 Active
Upaya City Cargo Nepal South Asia Manufacturing December 2021 Active
WorldLink Communications Limited Nepal South Asia Communications & IT services March 2023 Active

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