OREANDA-NEWS. On behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), KfW is investing USD 10 million of BMZ funds in the Aavishkaar Frontier Fund as cornerstone investor. KfW subsidiary DEG is investing another USD 10 million in the Aavishkaar Frontier Fund from its own funds. The Fund was set up to promote social entrepreneurship in Asia. To begin with, the Aavishkaar Frontier Fund's target countries will be Bangladesh, Indonesia, Pakistan and Sri Lanka.

"Socially responsible entrepreneurs help disadvantaged people and are successful financially at the same time. They thus create sustainable jobs and economic growth. The promotion of this Fund is therefore in line with the BMZ's new Asia strategy, which aims to establish a social and ecological market economy," explains Dr Norbert Kloppenburg, member of KfW’s Executive Board.

The Aavishkaar Frontier Fund is investing its own capital in selected, socially responsible companies from their start-up to their growth stages, while also offering consulting services. The current fund volume is USD 45 million, and the target volume is up to USD 90 million.

With their commitment as cornerstone investors, KfW and DEG are strengthening the capital basis of the Fund and thus mobilising further investors. Especially small and medium-sized, family-run companies will benefit from the programme, for whom access to private equity is limited.

The fund manager Aavishkaar is a long-term partner of KfW. After the success of the Aavishkaar II Fund, which was established in 2011 to promote Indian social entrepreneurs and in which KfW invested EUR 5 million, the new fund targets neighbouring countries in Asia.

The KfW portfolio in the field of developing financial systems amounted to EUR 7.4 billion at the end of 2014, EUR 2.6 billion of which were spent on micro-financing.