34111 - Frontier II

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Summary of Investment Information

Project Number

34111

Company Name

FRONTIER BANGLADESH II LP

Date SPI Disclosed

Apr 1, 2014

Country

Bangladesh

Region

South Asia

Projected Board Date

May 5, 2014

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

May 24, 2021

Department

Equity Portfolio Management

Industry

Financial Markets

Previous Events

Approved : May 27, 2014
Signed : Apr 23, 2015
Invested : Jul 7, 2015

Sector

Private Equity/Venture Cap Fund - Country

Project Description

The project entails an IFC equity investment of up to US$ 20 million in Frontier Bangladesh II L.P. (the “Fund” or “Frontier II”). The Fund has an investment emphasis on companies requiring growth capital and strategic inputs for growth. The proposed project is a successor fund to Frontier PE (Cayman) L.P. (“Frontier I”), a US$88mn fund of 2009 vintage, which was the first PE fund in Bangladesh established with IFC’s support.
Frontier II has a target size of US$100million, accepting up to US$150 million. The Fund will invest in small and medium sized companies engaged in a broad range of sectors, including but not limited to consumer, manufacturing, agriculture, healthcare, technology and hospitality.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	20.0

Development Impact

(i) Job creation: The fund is expected to deploy growth capital in private sector companies spurring job creation, which is typically at a higher rate than the national average.
(ii) Private sector development: The Fund is expected to promote sustainable growth in companies that do not have access to other sources of capital. There is significant value addition to portfolio companies through capacity building, improved corporate governance and transparency, while providing operational and financial expertise in building new business opportunities and partnerships.
(iii) Frontier Market Development: The Fund is expected to create access to capital in an underserved PE market and the Fund's successful exits of investee companies, which potentially include IPOs, would help in deepening of domestic capital markets.
(iv) Incorporating IFC's E&S standards: applying international best ESG practices at the Fund and investee level will contribute to sustainable economic development.

(i) Catalytic Role: by investing in Frontier I, the first PE fund in Bangladesh, IFC played a catalytic role paving the way for the PE eco-system to develop in the country. Supporting Frontier II will be a continuation of the same catalytic support to the still nascent Bangladesh PE industry, and will allow the Fund to mobilize other investors in order to have a successful closing of this scale.
(ii) Demonstration Effect: IFC investing in Frontier II will act as an institutionalizing agent, and strongly signal to the investor community that Bangladesh is a viable and attractive region for growth capital. This will also likely open or increase other channels of expansion capital into Bangladesh where currently small to medium entrepreneurial companies have limited access.
(iii) IFC Performance Standards: IFC's investment will assist in establishing the Fund in accordance with IFC standards. It will also assist in the standards being transmitted across to the Fund's investee companies. The Fund is already aware of IFC performance standards via Frontier I.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Employment: New Jobs in Fund Investees (#)	Cumulative New Jobs (#)	Not Available	Not Available	Not Available
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement	Not Available	Not Available	Not Available
Direct Employment (#) - Operations and Maintenance	Employment (#)	Not Available	Not Available	Not Available
Female Direct Employment (#) - Operations and Maintenance	Female Employment (#)	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Fund will provide growth capital to companies engaged in a broad range of high-growth sectors. Key interest sectors for the Fund include retail, consumer goods, pharmaceuticals, healthcare, garments and textiles, ceramics, light manufacturing, real estate construction/refurbishment, petrochemical/refinery and information technology. The Fund will typically provide equity or equity-related capital to companies that can employ this capital in order to accelerate the growth of their business.

Overall, the pipeline present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. Hence, the E&S risk of the proposed investment is medium and the project is categorized as FI-2. The applicable Performance requirements will be i) the IFC- FI Exclusion List; ii) The host country E&S laws and regulations; and iii) the IFC Performance Standards.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Fibre at Home	Bangladesh	N-AD- Other (Including Satellite Telecommunications, Radio and Television Broadcasting, etc.)
Zero Gravity	Bangladesh	Q-BF- Internet Retailers (e-Commerce Companies, platforms, marketplace etc.)

Key E&S risks in the country revolve around labour and working conditions including the supply chain and third party workers and occupational health and safety including fires safety and construction safety. These issues cut across industries and size of corporates. In addition to these risks and impacts, at operational entities other key E&S risks includes waste and pollution management and possibly land and biodiversity impacts depending on the nature and location of the project. The fund has an E&S risk management system benchmarked to IFC Performance Standards and a senior staff responsible for its implementation. The fund manager needs to improve the implementation of risk management system for E&S due-diligence and portfolio monitoring.

The fund will also need to develop guidelines for reputation risk screening in case of holdco investments, close monitoring of projects during initial phases, including construction phase where applicable, use of technical third party E&S experts and portfolio risk review once every 2 years.

Task Title & Description	Actual Due Date	Status	Comments	Completion Date
Develop guidelines		Completed
Reputation risk screen		Completed

Contacts

For Inquiries About the Project, Contact

Brummer & Partners Asset Management (Bangladesh) Ltd.
Crystal Palace, 6th Floor, 22 Gulshan South Avenue
Gulshan-1, Dhaka-1212, Bangladesh
Tel: +880 2 989 0460
Fax: +880 2 989 0522

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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