CDC Group has announced its first investment in two vehicles in Africa managed by Vantage Capital and BluePeak that assist the growth of African enterprises in the private sector as part of its objective to help intermediate businesses in Africa.
CDC Group
The CDC Group, a development finance company based in the United Kingdom, has pledged $60 million to two Africa-focused investment funds. The first half of this sum was put into Vantage Mezzanine Fund IV, a vehicle run by Vantage Capital, a mezzanine fund manager. BluePeak Private Capital Fund I, a vehicle managed by BluePeak, received the other half.
“These commitments will allow fund managers to increase lending to African mid-market companies by providing tailor-made financing that meets market needs,” CDC Group said in a statement.
The group’s first investment as part of the African Private Credit Fund Strategy is this initiative. This newly established strategy aims to support the growth of African intermediary companies and attract investors to the continent’s markets.
CDC Group seeks to support the growth of medium-sized businesses by deploying a variety of financial instruments. These businesses generally struggle to obtain the capital they need to expand their operations.
The arrival of covid-19 having further tightened the availability of capital on African markets, the British investor believes that it is playing a major role for the benefit of the private sector.
The partnership with BluePeak and Vantage Capital will extend to other fund managers who engage alongside mid-size companies in Africa.
CDC Group investments Africa CDC Group investments Africa
U.K.-based CDC Group has signed a Memorandum of Understanding (MoU) with the Nigeria Sovereign Investment Authority (NSIA). The strategic investment partnership is designed to facilitate long-term inclusive growth and encourage private capital to scale up their participation in high-impact sectors of the Nigerian economy.
“The agreement includes information sharing on prospective projects in Nigeria and Africa at large with the ambition to co-invest in sectors such as healthcare, agriculture, infrastructure and climate-resilience. The partnership will foster collaboration on areas of knowledge sharing with an explicit objective of creating jobs and generating impact in Nigeria and across Africa,” a press statement read.
Here Is What You Need To Know
CDC Group and NSIA have both invested in Africa-focused private equity funds managed by CardinalStone, Helios, and Sahel Capital. The announcement builds on CDC’s January 2020 commitment to invest an additional £2 billion in African companies between 2020 and 2022.
NSIA’s US$ 685 million Future Generations Fund invests in a diversified portfolio of asset classes, including private equity and venture capital, in order to provide future generations of Nigerians a savings base in the context of declining domestic oil reserves, mirroring CDC’s long-term commitment to sustainably investing in Nigeria.
CDC is funded by the U.K. government.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
2020 is looking great already for African startups. UK-based impact investor CDC Group has announced a raft of new deals with Africa-based counterparts totaling USD400mn, to be invested in startups across the African continent.
Nick O’Donohoe, Chief Executive of CDC
Below Is A List Of African Funds The Group Has Invested In
TLcom’s TIDE Africa Fund
CDC Group committed US$15 million to TLcom’s TIDE Africa Fund to support early stage high-growth start-ups across sub-Saharan Africa (SSA).
With a presence in the key financial hubs of Lagos and Nairobi, TLcom targets businesses that leverage technology to address African business and consumer challenges in key sectors of the economy such as education, agriculture, transportation & logistics, healthcare, and financial services. The firm has backed some of Africa’s most prominent early-stage companies, including Kobo360, Andela and Twiga Foods, which have collectively raised $250m to date.
The CDC investment will support the UN’s Sustainable Development Goals, particularly goals 8, 10 and 9.
“The investment in TLcom provides an exciting opportunity for us to support early-stage companies at a critical stage in their growth and deepen the entrepreneurial ecosystem across Africa,” Nick O’Donohoe, Chief Executive of CDC, said.
TLcom will invest between $500,000 and up to $10 million per venture, enabling high growth companies to achieve scale and attract later-stage funding from global VC investors, regional PE firms, and strategic partners.
TLcom has already completed six investments including Kobo360, Andela, and Twiga Foods, each creating large scale economic opportunities through enhanced market access in the logistics, software engineering, and agribusiness sectors.
$39.2 million Investment In West African Funds For Access to Startups in West Africa
CDC Group,also announced the commitment of $39.2 million to support SMEs in West Africa. CDC is backing Verod Fund III and Adiwale Fund I, West-African based private equity funds targeting SMEs in the region, with commitments of $19.2m and $20m respectively.
Adiwale Fund I is an SME fund primarily targeting investments in West Africa focusing on Cote d’Ivoire, Senegal, Burkina Faso and Mali. It is the first fund raised by Adiwale Partners and will make investments in selected industry sectors (FMCG, business services and manufacturing) with commitments of $3–10 million.
Verod Fund III is the second fund being raised by Verod Capital to invest in West African SMEs. The fund manager has built a strong investment track record over the last decade, committed capital to 18 companies in Nigeria and Ghana and concluded 10 successful exits.
Fund III is targeting investments in consumer-facing SMEs in Nigeria and Ghana. The fund will be focused on sectors such as consumer goods and services, agribusiness and financial services with investments of up to $20 million concentrating on themes including regional expansion and import substitution. Verod has attracted $200m in total commitments for Fund III, with a significant share (40%) of commercial capital, reaching its target despite the current challenges in fundraising for African private equity.
“In West Africa SMEs should be the engine room of regional economies but they are being held back by the lack of access to finance. As the largest private equity investor in Africa, CDC is committed to boosting access to finance for these businesses. Investing in SMEs enables our capital to go further and we expect that positive returns will generate an important demonstration effect and help mobilise further capital into these markets, encouraging more commitments towards the United Nations Sustainable Development Goals,” Nick O’Donohoe, CEO of CDC Group commented.
US$100 million trade finance agreement with Absa boost Finance To South African Startups
CDC Group plc (“CDC”), also announced at the Africa Investment Summit a US$100 million trade finance loan with Absa Bank Limited (Absa), one of Africa’s largest diversified financial services groups.
The fresh injection of finance will be deployed by Absa and its affiliates in 12 countries to support trade transactions undertaken by local businesses, African SMEs and entrepreneurs.
This direct loan follows a recent agreement by CDC to provide a US$75 million trade finance facility to Absa. The combined sum of US$175 million is CDC’s largest trade finance commitment in Africa.
“CDC now has US$850 million of commitments in place with five partner banks and has subsequently supported nearly 2,000 trade finance transactions across Africa and South Asia since 2015.
“Our commitment to boosting African trade is paramount to the economic and social development of the continent, and to addressing a US $90 billion to $120 billion financing gap to local businesses,’’Admir Imami, Director, Head of Trade & Supply Chain Finance at CDC, said.
US$20m Investment in Metier Sustainable Capital II Fund to support renewable energy Startups
CDC Group also made a US$20m commitment to the Metier Sustainable Capital II fund.
The South African private equity fund will provide growth capital to renewables and resource efficiency projects in sub-Saharan Africa.
Metier will also provide much needed capital to enable small-scale utility projects to reach financial close. Smaller projects often struggle to attract commercial capital as it prioritises larger and more bankable utility scale projects.
The investment is part of CDC’s strategy of supporting the UN’s Sustainable Development Goals to fight climate change, provide affordable and clean energy and decent work and economic growth.
“The Metier Sustainable Capital II fund will both support the expansion of renewable energy across sub-Saharan Africa and invest in resource efficiency opportunities, leading to better water and waste management practices being adopted. CDC’s support for the fund will help Metier build on the track record they have developed in their first Sustainable Capital fund, and we look forward to working closely with the Metier team as we develop a long-term partnership with the firm,” Clarisa de Franco, Managing Director, Africa Funds at CDC, said.
€25 million commitment to North Africa’s Mediterrania Capital Partners III (MCP III)
CDC Group plc (“CDC”), also announced a €25 million commitment to Mediterrania Capital Partners III (MCP III), a generalist fund primarily targeting investments in North Africa.
CDC’s investment will enable MCP III to invest in companies that have strong local brands and established customer bases, with the potential to become regional leaders and achieve further revenue growth and operational efficiencies.
In turn this will help create new direct and indirect jobs, particularly for semi-skilled and unskilled workers in a region where youth unemployment is high.
The fund has already made four investments, including Cairo Scan, a radiology and lab services provider in Egypt, and COFINA, a provider of financial services predominantly active in Cote d’Ivoire.
“Our investment in MCP III will support well-established local firms that demonstrate strong potential for growth to become regional leaders, providing the capital and expertise for them to expand. This investment allows us to begin a partnership with a team which has the potential to become a leading mid-cap pan-African fund manager,”CDC’s Head of African Funds, Clarisa De Franco said:
$10mn Addition To Its Commitment In Pan-African Solar Power Provider Mettle Solar Investments.
CDC Group, also added to its renewable energy portfolio with a $10 million debt deal with Mettle Solar Investments.
The new tranche of financing follows an earlier $7.5 million equity investment in Mettle by Gridworks, the company set up and funded by CDC last year to invest in critical power infrastructure.
The $10 million debt facility for Mettle comes from CDC’s Energy Access and Efficiency team that specialises in lending for decentralised energy and resource efficiency solutions.
The equity and debt investments will enable a quicker uptake of cleaner and cheaper sources of electricity for businesses across Africa. In addition to the reduction of carbon dioxide emissions from solar generation, electricity costs for businesses can be significantly reduced — sometimes by up to 40 per cent.
“The loan will enable Mettle to catalyse the generation of renewable energy and use of battery storage across Africa while also addressing the current market failure of inflexible and expensive debt financing, lack of proven market and poor customer understanding of the solar industry,”Nick O’Donohoe, Chief Executive of CDC, said.
Other Investments Include:
CDC Group plc (“CDC”), also announced a US$75 million risk sharing facility with the Eastern and Southern African Trade and Development Bank (TDB). The commitment is one of a string of new CDC partnerships totalling nearly $400 million announced today at the UK-Africa Investment Summit in London. The bulk of funds will be used to provide African banks with greater liquidity to support SMEs, entrepreneurs and microbusinesses in their markets. CDC’s investment will enable TBD to increase trade flows by up to US$420 million over the next three years in the markets in which it operates.
A $100m trade finance loan with ABSA, the South African bank, to support SMEs in southern Africa
An MoU to commit $100m to CIB of Egypt to allow the bank to further support SMEs and microfinance enterprises
A $75m trade finance agreement with TDB to support bank lending to SMEs in 32 African countries
A $10m debt agreement with Mettle Solar Africa to accelerate the roll-out of solar energy in South Africa and Namibia
$27.5m investment in Mediterrania III Fund to support mid-cap businesses in North and West Africa
$20m investment in Adiwale I Fund to support SMEs in West Africa with growth capital
A $20m investment in Verod Cap Growth III Fund to support SMEs active in high growth sectors in West Africa
A $20m investment in Metier Sustainable Capital II Fund, a renewables fund focusing on sub-Saharan Africa
A $15m investment in the TLcom TIDE Africa Fund, a sub-Saharan African VC fund that supports businesses that leverage technology and innovation
Nick O’Donohoe, Chief Executive of CDC, said:
“Investors have a real opportunity to embrace the UN’s Sustainable Development Goals — in partnership with African countries and businesses — to fight climate change, create jobs and skills and bring about positive social and environmental change.
“The commitments we have announced today will accelerate the roll-out of solar power and other renewable technologies and support the growth of countless SMEs — the bedrock of any healthy economy — across the continent.”
CDC is responsible for over 10 per cent of all capital invested through Africa-focused private equity funds.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com
