46805 - Techxila II

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Summary of Investment Information

Project Number

46805

Company Name

TECHXILA II LP

Date SPI Disclosed

Mar 10, 2023

Country

Pakistan

Region

Middle East

Projected Board Date

Jun 1, 2023

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

May 11, 2023

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Apr 20, 2023

Sector

Venture Capital Fund

Project Description

IFC equity investment of up to $10m in Techxila Fund II L.P., managed by Fatima Gobi Ventures (“Fatima Gobi Fund II, “Fund II, the “Fund” or “FGV II“), a Mauritius domiciled Venture Capital (VC) fund that will invest in Tech Start-ups primarily in Pakistan.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	10.0

Development Impact

Expected project level outcomes: Access to venture capital in Pakistan has grown in recent years but remains some of the lowest across emerging markets. As such, IFC expects the project level outcomes to include increased access to early-stage venture capital alongside operational value add for tech startups in Pakistan. This will help scale innovative digital business models and bring more businesses and consumers online to expand the digital economy. Expected market creation: IFC expects that the Fund, as the one of the only experienced and scaled fund manager in the market, will increase competitiveness of the emerging but nascent VC market in Pakistan. The Fund is also involved in several VC ecosystem building activities that are expected to have network effects in improving the pipeline of investable startups, which is a critical enabler to generating a viable VC funds market

Given the nascency of Pakistan’s VC ecosystem, VC fundraising over the last year has been some of the lowest across most emerging markets. Most of this fundraising is at very early accelerator or seed stages and there are few funds that operate in Series A stages or beyond. As such, FGV is raising their second fund in a country with a relatively higher investor risk perception and where fewer institutional LPs are active. It is expected that IFC’s own account equity of $10 million is essential to help the Fund achieve its target size while also benefiting from the knowledge and networks that IFC can provide to the Fund Manager and its investees .

E&S Category Rationale / Risks and Mitigation

The Project has been categorized as FI-2 in accordance with IFC Sustainability Policy. Techxila Fund II LP is primarily targeting low risk sectors and companies mainly technology startups in Pakistan while there could be few investments in ecommerce/warehouse/logistics, and retail/showroom operations. IFC's applicable E&S requirements for the Project will potentially be the IFC Exclusion List, host country's E&S laws and regulations, and IFC Performance Standards. The Project will not support any activities on IFC Exclusion List, coal related, and higher risk business activities, involving a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or d) significant Occupational Health and Safety risks. The project's key risks and impacts are associated with the Fund's capacity to sufficiently manage the E&S risks associated with the supported portfolios including external grievances, and labor and working conditions issues associated with the gig economy, among others.

FGV has a global E&S policy which is also being implemented in Pakistan. The ESMS provides for checking portfolio companies' alignment with the Exclusion List and national E&S laws and regulations. The Fund has assigned sufficient E&S responsibilities by assigning the Head of Investment as ESMS officer. There is an established External Communication Mechanism (ECM). The Fund will be required to enhance their ESMS to include proper additional tools in line with IFC Performance Standards, to be applied where and if necessary. The Fund will be required to inform IFC in the event of any material change in nature or scope of its portfolio activities. IFC will review the first three E&S due diligence reports prior to the Fund's investment to support the implementation of the ESMS. Additionally, IFC will disclose medium risk investments, if any, on a yearly basis, including their names, sectors and locations.

Contacts

For Inquiries About the Project, Contact

Fatima Gobi Ventures
Taraec Hussein
Head of Investments

tarraec@fatimagobi.vc
Lahore Cantt., Pakistan
https://fatimagobi.vc/

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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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Task Title & Description	Anticipated Completion Date
Update ESMS	06/30/2023

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