AfDB supports inclusive growth through investment in AfricInvest Fund III

10 Jul 2015
Financial Nigeria

Summary

AfricInvest Fund III will generate significant positive development results such as job creation and tax revenues.


The Board of Directors of the African Development Bank (AfDB) has approved an equity investment of €20 million to the AfricInvest Fund III. Among the well-established and impactful African private equity funds, AfricInvest is one of the longest standing and successful funds. The Fund, a successor to AfricInvest Funds I and II, is targeting €200 million to invest in midcap companies to transform them into regional champions.

Having also invested in its predecessors, the equity investment of the AfDB comes as part of the second and final closing, along with the participation of other DFIs and some private investors. AfricInvest Fund III is expected to yield increased financial returns in high growth sectors such as manufacturing, agribusiness, financial services, healthcare, energy and consumer goods across Africa.

The Fund is expected to provide scarce risk capital to high-potential mid-sized companies in Sub-Saharan Africa, thereby enabling them to become dominant national and regional market leaders. It is well recognized that mid-sized companies are backbones of commercial and industrial structure, accounting for over 95% of the private companies in Sub-Saharan Africa. These companies typically show weak capacity to manage business succession and expansion. AfricInvest brings its expertise to enhance corporate governance, marketing strategy and skills transfer.

Through its investments in well-identified transactions, AfricInvest Fund III will generate significant positive development results such as job creation and tax revenues. It will lead to increased regional integration by supporting multinational expansion of the investee companies. It will also generate positive gender and social effects by creating economic opportunities for women, developing social infrastructure and investing in fragile states.

By investing in this Fund, the AfDB complements its existing initiatives to support the development of private sector and financial markets on the continent. The AfDB has as one of its top priority objectives to support investments that contribute to inclusive growth on the continent, through financial intermediation by providing funds to the capital-constrained midcap sector, and through positive development impact.


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