Sarf will invest in another Indian telecommunication project shortly, he said. "The fund's third investment is in a tourism project in the Maldives," Balendra said. Sarf will invest $3 million in the project to be handled by Aitken Spence Company of Sri Lanka. Aitken Spence has built two tourist resorts on two islands in the Maldives.

Sarf, an equity investment fund for development activities in south Asia, was established by the Commonwealth Development Corporation (CDC) after a directive at the last Commonwealth heads of government meeting in Edinburgh. The fund will meet the region's growing equity needs.

The Sarf board is examining several proposalsforwarded by CDC representatives in the region, Balendra said.

The $108-million fund can invest throughout the South Asian Association for Regional Cooperation (Saarc) region, CDC chief executive Donald Peck said. "Its objective is to achieve long-term capital appreciation via equity investments in private sector companies," he said. Sarf can make investments of up to $11 million in any one project, taking significant minority equity positions. It can also invest in a wide range of sectors and listed or unlisted shares, management buy-outs, expansions, start-ups and management buy-ins with significant growth potential, he added.

"Sarf is not a short-term portfolio investor," Peck said. "It is a long-term investor working closely with management teams." While regional equity markets have performed poorly over the past six months, Sarf takes a long-term perspective, focussing on the fundamentals of an investment, he said.

The Commonwealth Development Corporation has a $78-million portfolio in Sri Lanka,including investment in the country's largest financial institution, the National Development Bank (NDB).