Dolma Impact Fund II

• 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.

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.

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.

• 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.

• 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

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.