African Rivers Fund IV

Equity : December 2024

BIO has committed USD 10 M in equity in the African Rivers Fund IV (ARF IV), a sector-agnostic investment fund focused on SMEs located mainly in the Democratic Republic of Congo, Uganda, Angola and Zambia.

Amount

$ 10,000,000.00

Type of investment

Equity

Development impacts

Local economic growth
Private sector consolidation/innovation
Promotion of ESG best practices

Beneficiary locations

Africa: Angola, Democratic Republic of Congo, Uganda, Zambia

Investment field

Investment Companies & Funds

Activity

KK.64.300 SME Fund

Organisation

African Rivers Fund IV

Website

https://www.xsmlcapital.com/

Domicile

Mauritius

African Rivers Fund IV is the 4th private equity fund launched by XSLM. The fund will largely pursue the same investment strategy as its predecessor funds, in which BIO has invested, by providing medium- to long-term financing to SMEs that are mainly located in the Democratic Republic of Congo, Uganda, Angola, and Zambia.

ARF IV will invest through a mix of USD-denominated debt and mezzanine instruments, and selective minority equity stakes. The manager is planning around 50 investments, with an average ticket size between USD 2-3 M.

Development impacts

Local economic growth
Improving access to long-term debt-funding solutions for around 50 income-generating and high growth SMEs in a large variety of sectors in Central Africa - with large exposure to LDCs (min 90%) and DRC (+- 50%), accelerating SME's growth and related job creation, job quality and fair wages, through improvements in labour conditions and E&S risk management.
Private sector consolidation/innovation
Supporting the only fund manager with a (local) team on the ground in the Democratic Republic of Congo, catering tailor-made, flexible debt offering - including mezzanine or quasi-equity instruments - funding to SMEs in difficult markets, and ensuring value creation through the manager's hands-on approach that enables these SMEs to institutionalise by providing know-how and support, particularly in operational improvements, financial management and reporting and ESG best practices
Promotion of ESG best practices
Strengthening the ambition and effectiveness of the platform's E&S risks management and improvements thanks to a harmonised ESAP between DFIs (e.g. dedicated E&S resources and clear role and responsibilities, ESMS upgrade, integration of LGBTQ, GBVH and climate risk considerations, E&S monitoring, etc.), in-house E&S manager and coordinators, systematic identification of E&S requirements and need to support improvements with technical assistance.

E&S Impact

At the time of BIO's investment, ARF IV had already worked closely with first close investors to update the ESMS, improve E&S capacity and integrate specific procedures to address risks related to GBVH, human rights and climate change. Therefore, BIO only required ARF IV to test new tools to strengthen its approach regarding decent work.

Situation at the time of investment

ARF IV hired a dedicated E&S Manager who works closely with three local coordinators and four E&S consultants supporting the investees. The fund is supported by regular meeting with the investors' E&S committee. It has a comprehensive ESMS updated in 2024 covering all steps of the investment process. Upon request of investors, ARF IV will not invest in high-risk projects from an E&S point of view.

Risk Category: B+