CDC, the UK’s development finance institution, has today announced two new investments in Africa-focused funds. CDC has committed up to EUR25million to AfricInvest Fund III (“AFIII”) and up to US$15m to Synergy Private Equity Fund (“Synergy”).
CDC’s capital will be invested by both funds in small and mid-cap companies. AFIII and Synergy will target companies across a broad variety of sectors that show significant potential to grow from a local presence to a regional or continental level, with individual investment sizes likely to range between US$5-15m. AFIII will invest across the continent while Synergy will focus on Nigeria and Ghana.
CDC has now made three African fund commitments in 2014, with today’s announcement following on from a US$40m commitment to the Investec Africa Private Equity Fund II earlier in the year. CDC’s Africa portfolio now consists of 58 funds with total commitments of $2.3bn.
About AfricInvest Fund III
AFIII is the third, pan-African generalist fund raised by AfricInvest Capital Partners (ACP). AFIII is aiming to raise a total of EUR200m for investment across the continent.
As with the previous two AfricInvest funds, the geographic remit will be broad, with a focus on North, West (Anglophone and Francophone) and Eastern Africa. Target sectors will include manufacturing and agribusiness, retail, education, pharmaceuticals, financial services, packaging and telecoms.
Companies in which earlier AfricInvest funds have invested include Mansard, among the strongest insurance companies in Nigeria, and Exat, a natural rubber production and transformation business in Cote d’Ivoire.
Synergy Private Equity Fund is the first fund to be raised by Synergy Managers, a first-time team based in Lagos and Accra. The Fund is aiming to raise US$75m to make investments in small and mid-cap companies in sectors including manufacturing, agro-processing, FMCG, non-bank financial services, ICT and energy services in Nigeria and Ghana. CDC’s US$15m commitment will make it the biggest investor in the fund and has allowed Synergy to raise further capital from other investors.
“The focus of AfricInvest Fund III and Synergy on small and mid-sized businesses is important to CDC because we recognise the challenges that growing companies in Africa face when raising long-term growth capital. We want to see businesses that are local champions go up a level to become national and regional successes. Both the Synergy and AfricInvest teams are well placed to provide the risk capital and strategic advice to help them do this.”
“We’re committing our capital to AfricInvest Fund III because it is managed by an experienced team of investors with the potential to get capital into CDC’s preferred geographies and sectors. The AfricInvest team has a strong track record of supporting businesses that create jobs and are financially successful.
“We chose to back Synergy because CDC remains committed to developing the private equity markets in Africa by nurturing new fund managers. CDC has closely supported Synergy to help them put in place a fund that can attract commercial capital. Synergy can become one of West Africa’s leading SME investors bringing finance and strategic advice to fast growing companies. These companies will create new jobs, pay taxes and fuel economic growth in Nigeria and Ghana.”