About Dolma Impact fund II

Dolma Impact Fund II (Dolma) is an international private equity fund dedicated to investing in Nepal. Dolma achieved its first close in May 2021, and the final close in December 2022 at US$ 71.96 MN. It is the first commercial impact fund ring-fenced for Nepal providing growth capital to Small and Medium Enterprises (SMEs) with strong entrepreneurial and management capacities. It targets risk-adjusted market returns and, as an impact fund, builds positive social and environmental impact into the core of investee company strategies. BII holds a 20% stake in Dolma Impact Fund II, alongside FMO, IFC, Swedfund, DFC and JICA. Our investments spans a wide number of high impact sectors with a concentration on Renewable Energy, Healthcare, and Technology as the core sectors. The fund has already committed to invest US$ 19.43 MN in five companies in the technology, healthcare, and renewable energy sectors.

BII’s Strategy


BII is one of most strategically driven DFI/MDBs with a clear focus on impact and climate change, alongside positive returns. On a scale of capacity (technical and financial), clarity of strategy and innovation, and geographical focus we would put them at the top with FMO, who perhaps eclipse BII for climate finance innovation. We highly appreciate their target for gender-smart investments under the 2X challenge and their commitment to working with countries like Nepal that have limited access to such capital and have promising investment opportunities. Another theme that runs common between BII and Dolma is their interest towards digitization and technology infrastructure development which they recognize as the core to any economy’s development.

We understand that all proposals considered by BII must be financially viable. However, we also understand that their IC encourage high impact propositions explicitly. Dolma fell into that category, without which, such a risky frontier market which is the 10th most vulnerable country to climate change may not have been considered. Dolma also has had the opportunity to invest alongside BII in one of the Nepali companies. BII hold unparalleled experience in investment, and we learnt a lot regarding BII’s investment process, key considerations and value creation strategies that they work on for their investments. ESG and Impact has been at the heart of their investment, and they have tried their best through provision of proper talent, required resources and consultations to keep the ESG practices at their best.

Dolma works closely with both BII as an investor, and FCDO. Together, they create a powerful force when lobbying for essential reforms in Nepal for a better business climate. In the UK, FCDO is key in introducing us to key institutions that can crowd in private sector capital into climate finance in Nepal. Most recently, through Nick Brown, we were introduced to the sustainability group at the London Stock Exchange for a potential issuance of green bonds to finance more renewable energy at a time when climate change threatens the Himalayan glaciers. Both FCDO at the Embassy in Nepal, and back in the UK, are central to our work, and with the partnership with BII, the whole is greater than the sum of the parts.


BII and its Investments

BII’s due diligence was a comprehensive process which composed several calls with the team members, exchange of queries and a 3 day long due diligence done alongside FMO and Swedfund.  BII’s due diligence was among the most thorough of all our investors and probably ranks again, at the top, with FMO, in our experience. The process took roughly a year to get the final approval which was similar to other investors. DD focus areas were investment risk, valuation, and exit. Their evaluation also assessed how they could maximise their impact creation specially in Business Integrity and ESG. The deal team voraciously inquired about several aspects of Dolma’s business, processes, team and culture.

When it comes to BII’s management decisions, we can say that it is essential that their investment decisions remain independent and apolitical, beyond high level strategic goals and financial oversight. In terms of their influence on investment decision due to external and political events, we would like to say that thankfully, Nepal has not experienced a crisis since BII’s investment, but we expect that if political risk were to increase dramatically, especially in the case of conflict, that this would affect commercial risk and therefore BII’s view.

BII’s Post Investment Activities

BII’s oversight of their investment in Dolma has been remarkable. BII has taken the lead among DFIs/MDBs in building a Business Integrity team that helped us develop and improve our internal controls and those of our portfolio companies. DIF II qualified for the 2X challenge, formalizing the gender equality and inclusion policies that have been at our core since inception. BII teams pointed us to their Fund Managers Guide to Gender-Smart Investing and Gender Toolkit, that provides fund managers with a roadmap on how to strengthen gender diversity at the firm level and integrate it in our investment process and portfolio management along with emerging trends and case studies. Similarly, their ESG toolkit has also provided us a reference point and helped our team, particularly the Advice for Fund Managers section. Dolma was also introduced to BII Plus which is their technical assistance and support facility. BII Plus intends to maximise their development impact by creating value to its investments in areas such as employee wellbeing, inclusiveness, developing expertise and capacity, and innovation. Dolma will be working with BII Plus to explore technical assistance and capacity development support opportunities to the fund and its portfolio companies. We have noticed that BII Plus has less financial capacity compared with other DFI’s technical assistance programmes. Given the importance of capacity building to the success of investments in countries like Nepal, we feel an increase in that budget may increase investment performance and the impact that comes with it.


Besides this, there is regular oversight by BII on Dolma’s performance. We submit quarterly and annual reports constituting all the financial, operational and impact performance of the fund and its portfolio companies. We arrange quarterly investor meeting where BII and Dolma can openly discuss our investment progress. BII assures that there is at least one in-person visit per year by the investment team to Nepal to meet Dolma, its team, and investments. In addition to these scheduled meetings and reporting, there are several other interactions between BII and Dolma which has always been a pleasure for us.

BII are very effective at monitoring and helping improve the prospects of our investments. As Fund II launched, BII has offered support to help us plan our first few investments. Another facility that BII has offered is the connection that they can make to similar companies in the nearby countries especially India. We were introduced to some of their direct and indirect investments in India with similar business models as Dolma’s pipeline companies. We and Upaya City Cargo (a Dolma portfolio) have visited Ecom Express, an end-to-end logistic solution provider and had several dialogues thereafter to learn about the do’s and don’ts, the business model and the opportunities and challenges of such businesses. Similar connections and support from BII will be essential for our future deals and pipeline companies too. Their Business Integrity division were instrumental in shaping the BI due diligence ToR. They also helped us in searching and selecting the BI DD consultants and guided us throughout the process.

BII has a strong impact team that not only closely monitors the impact, but also helps us shape our reporting. Their outcome in terms of impact can be evidenced in their portfolio in improved capacity, service delivery, cleaner solutions, and affordability. Dolma understands the importance of measurement and reporting on appropriate non-financial indicators for sustained impact performance and has consulted with BII team to create its own framework. The key indicators for us have been climate, gender, and employment creation.