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Lamoda gets $10m from the World Bank

0 28 January 2014

Major Russian online fashion retailer Lamoda has secured a $10 million equity investment from the International Finance Corporation (IFC), a member of the World Bank Group.

The IFC holds a $49.6 billion portfolio, and its total investments in 2013 were almost $25 billion. It seeks to “use capital, expertise and influence to help eliminate extreme poverty and promote shared prosperity”. 

Since Russia joined the IFC 17 years ago the fund has invested total of $10.1 billion in 267 projects. Its current Russian portfolio is worth $2.24 billion, putting Russia in fourth place in terms of worldwide IFC investment. 

Lamoda is probably not a typical candidate for IFC funding. The corporation’s Russia strategy places a particular focus on infrastructure, value-added manufacturing, banking/financial services, sub-national finance, agribusiness and ‘health and education’. 

However, referring to the decision to invest in Lamoda IFC global director for manufacturing, agribusiness and services Atul Mehta explained that 

“Internet companies are speeding up modernization of the retail supply chain in developing countries, which promotes consumer spending—a key component of economic growth. Their investments in logistics, information technology and marketing are rapidly generating employment, especially for women and young people.” 

The IFC press release also mentions that “Lamoda employs thousands of people in the CIS region, with over two thirds of them women”, and suggested that Lamoda supports jobs indirectly in logistics, IT and by facilitating demand for locally sourced goods. 

This investment comes just 7 months after Lamoda, which was launched in 2010 by German incubator Rocket Internet, raised $130 million in the largest ever Russian venture deal. 

Niels Tonsen, Lamoda’s German CEO, admitted that the company doesn’t exactly need the money, but was very happy to welcome such a “reliable and important partner” to its shareholder base. 

The money is to be directed at consolidating sustainable growth while “further raising environmental, social and corporate governance standards”, and “aiding the regional development of the company’s express delivery network, Lamoda Express”. 

When asked how exactly the company was planning to raise its “environmental, social and corporate governance standards” Tonsen explained that 

“As a fast growing company with a headcount of over 2,000 today, it is very important to us to adhere to a high level of social, environmental and governance standards. This starts with basics like safe and friendly working conditions across all our facilities and continues with a genuine interest in the personal and professional needs of our employees. Hence we continuously invest, for example, in mentoring and training programs. Moreover, as a fashion retailer we take great care in the selection of our suppliers with regard to conditions under which goods are being produced.”

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Well said. 

Top image via Shutterstock

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