The project sponsor is a privately-held and independent fund management group, Ethos Private Equity Ltd, (“Fund Manager”) based in South Africa. Originally established in 1984 as a division of First National Bank (“FNB”) to manage its proprietary funds, it first raised third party capital in 1992 and spun-off as an independent group in 1998. Since achieving independence, the management company has been majority owned by its partners and managed aggregate commitments of ZAR 8.9 billion ($1.2 billion). The Fund Manager currently has 10 partners, all of whom are presently based in South Africa.

The fund has a target size of $750 million. IFC’s investment would be up to $30 million, not to exceed 20% of total capital commitments.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	30.0

* These investment figures are indicative

The Fund’s legal structure will comprise of one or more South African limited partnerships to facilitate investments by South African investors and one or more Jersey limited partnerships to facilitate investments by international investors. The Fund Manager is headquartered in Johannesburg and investments will be made in selected countries in Sub-Saharan countries.

The Fund is expected to deliver strong development impact by:

-Encouraging economic development in general, and private sector development in particular, by investing in high-growth companies which is expected to lead to above-average rates of job creation;
-Providing much needed growth and expansion capital and value-enhancing advice to companies located in Sub-Saharan Africa which are expected to feel the impact of financial crisis as GDP growth begins to slow;
-Improving companies’ sustainable development by helping to implement best practice corporate governance and environmental and social standards; and
-Facilitating regional integration by helping companies to expand their operations in neighboring countries and brokering partnerships and mergers & acquisitions among private sector players in the region.

Through its investment in the Fund and participation in the Advisory Board, IFC will have the following roles:

-Promote creation of a parallel vehicle to increase funding beyond South Africa;
-Help with regional expansion as the Manager plans to expand its operations outside South Africa;
-Provide additional industry experience on the Fund’s advisory board; and
-Ability to provide additional co-investment/debt financing to help investee companies realize their cross-border expansion strategies.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. The appraisal will focus primarily on how the Fund’s investment approach and due diligence process will enable it to identify, assess and manage environmental and social risks in respect of its investments to ensure compliance with the IFC’s FI Exclusion List, the applicable National Social and Environmental Laws and regulations and the IFC Performance Standards.

Based on the Applicable Performance Requirements and S&E Performance, the Fund Manager will be required to:

• Amend the existing SEMS, prior to commitment to the satisfaction of IFC
• Retain responsible, qualified persons to manage and implement the SEMS
• Continue to implement the SEMS to ensure that its investments/activities are in compliance with the Applicable Performance Requirements
• Continue to submit a periodic report to IFC as per the format provided by IFC

Additionally for all Category A subprojects, the Fund will continue to be required to satisfy IFC that the subprojects are in compliance with the Performance Standards or have a satisfactory action plan to bring the subprojects into compliance within a reasonable time frame prior to investing.