IFC, a member of the World Bank Group, has announced the first closing of the IFC Financial Institutions Growth Fund (FIG Fund), committing $150m to the fund.

The Fund has raised approximately $345m from IFC, the State Administration of Foreign Exchange of China, the Japan Bank for International Cooperation, and the Hungarian Export-Import Bank.

IFC said it has additional commitments of $50m for subsequent closings of the fund.

The Fund is a global fund that will work in emerging markets including Africa.

The FIG Fund’s mandate is to make equity investments alongside IFC in growing emerging market financial institutions, supporting private sector development by increasing much needed access to finance for small and medium enterprises (SMEs) in those markets.

Jin-Yong Cai, IFC EVP and CEO, said: “Global and local financial institutions increasingly need more capital to keep up with the rapid growth of economies in emerging markets, and to finance expansion opportunities to remain competitive.”

“This fund will support these institutions with core capital, helping promote economic growth and development while aiming to achieve strong returns,” he said.

As a result of the growing economies, there is a larger need for equity capital by financial institutions in emerging markets.

However, most institutions face significant challenges raising capital due to perceptions of system risk, funding constraints and changing regulatory environments.

In order to address this gap in funding, there is an increasing opportunity for alternative vehicles like private equity funds to mobilize resources into sustainable businesses in emerging markets.

Equity investments in quality financial institutions can also help further strengthen local financial systems against the risk of future potential crises.

“These investments provide the potential for attractive financial returns as a result of strong economic growth, a dynamic and growing middle class and increasing financial services penetration in these countries,” said IFC.

“The fund will provide investors with access to IFC’s pipeline of investment opportunities and will develop a diversified portfolio of financial institutions in emerging markets,” IFC said in a statement.

IFC’s committed portfolio in financial institutions totaled more than $24 billion as of the end of FY2014, enabling it to increase access to finance for SMEs and entrepreneurs.