HANOI -- Dutch development financier FMO may pour another $1.4 million into a second fund for Emerging Markets Investment Advisers in a move to bolster its portfolio in the face of COVID-19.
As the international development bank of the Netherlands, FMO hopes increased funding will replenish follow-on reserves of the Cambodia-Laos-Myanmar Development Fund II.
"While the Fund's investees have shown resilience, capital earmarked for future growth has been depleted to cover working capital and operating expenses during the lockdown. The Fund's follow-on strategy has also been affected," the bank said in an investment proposal.
The capital is expected to support the 13 portfolio companies of CLMDF II during and after the crisis.
"An increase in commitments would help the Fund achieve its value creation objectives and support investees in reaching their initial growth targets," FMO added.
FMO had earlier promised $10 million to CLMDF II's first close in 2015. The fund closed at $64.5 million with investments in 13 companies, the majority of which were in Cambodia. Four companies in Myanmar and three in Laos also received funding.
Joshua Morris, CEO of Emerging Markets Investment Advisers, told DealStreetAsia last month that the firm has focused on working with investors to increase commitments to the second fund's follow-on reserves.
He also revealed that EMIA was looking to tap both existing and new limited partners to raise up to $120 million for a new vehicle. The third fund will continue the existing strategy of investing in Cambodia, Myanmar and Laos, and will be sector-agnostic.
"We expect to cover a fairly broad range of investment sizes in the new fund while leaving sufficient follow-on reserves to support growth after our initial investment," Morris said.
Limited partners in EMIA's funds also include International Finance Corporation and other European development institutions such as Norfund, Finnfund and Swiss Investment Fund for Emerging Markets.
"We have received strong indications of interest from our existing [limited partner] base as well as from new investors," Morris said. "Our markets remain a priority for many of our [partners]."
EMIA's $19.65-million first fund invested only in Cambodia and Laos but subsequently divested from the two countries, according to the CEO, dropping stakes in Camobodi's Park Cafe and microfinance company AMK along the way.
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