Transformation of the Venture Capital and Private Equity Sector by 2030

Global Private Equity fund managers are estimated to have USD 1.2 trillion available to invest. With Nepal’s need for capital investment in infrastructure and corporate growth, attracting Private Equity (PE) will be a critical factor if Nepal is to reach its developing target by 2030.

The growth of Nepal’s private equity sector offers a significant upside: as a means of fostering economic development and poverty reduction, private equity presents a scenario in which - unlike in the aid sector – both financial and social/environmental returns are simultaneously realized. Additionally, it promotes private sector development, particularly among small and medium enterprises, which ultimately means more sustained growth and development in Nepal and decreased dependence on imported products and services. Importantly, PE funds that bring in responsible capital help to enhance good corporate governance and environmental health and safety measures in private sector organizations.

Looking to 2030, we expect the PE/VC sector to become more regulated, as indicated by Finance Minister Bishnu Poudel’s reference to forthcoming private equity legislation in his recent budget speech; this follows from favorable policy changes, such as automatic route of FDI approval and liberalization of stock market restrictions for institutional investors. As the private equity sector matures, we expect the national insurance and pension funds to start their own private equity investment funds and also to see increased specialization as more sector-focused funds emerge.

Overall, we expect the sector to grow organically as commercial investors, looking to the investment track record set by development financial institutions and other early investors, are attracted to Nepal’s less risky, but still relatively high-return, investment climate. In the future, we could expect over 50% of Foreign Direct Investment (FDI) to enter the country in the form of private equity, hopefully substantially reducing Nepal’s need for foreign aid.

Dolma Impact Fund
The first international private equity and impact fund dedicated to Nepal
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