Lars Thunnell, the chief executive of the International Finance Corporation, has said he would advocate a fund of funds approach to encouraging investment in Africa, according to the IFC, confirming an article by UK newspaper Financial Times.
The IFC said it would be investing openly across a number of sectors including agribusiness. It will be seeking a partner to manage the fund.
“We're not talking about aid. We're talking about trying to create a new asset class,” Thunell said. “Some frontier investments can be very profitable.”
The World Bank, which backs the IFC, is looking to encourage Sovereign Wealth Funds to invest 1 percent of approximately $3 trillion (€1.9 trillion) of funds they have under management in Africa, according to the institution’s president Robert Zoellick.
Thunnell said a fund of funds was one way this investment level could be achieved.
State-backed fund of funds, such as Norfund, the Norwegian fund of Funds, and CDC Group, the UK fund of funds, have reaped strong returns from African investments, as emerging markets private equity houses begin to gather momentum on the continent. CDC posted record results today, as the value of its African portfolio rose by nearly 50 percent to £588 million ($1.17 billion; €736 milliion).