AfricInvest SME Fund

Equity : December 2024

BIO has invested EUR 10 M in equity in the AfricInvest SME Fund, a private equity fund that will support fast-growing SMEs in North and sub-Saharan Africa.

Amount

€ 10,000,000.00

Type of investment

Equity

Development impacts

Local economic growth
Private sector consolidation/innovation
Promotion of ESG best practices
Financial additionality
Non-financial additionality

Beneficiary locations

Africa: Algeria, Egypt, Kenya, Morocco, Nigeria

Investment field

Investment Companies & Funds

Activity

KK.64.300 SME Fund

Organisation

AfricInvest SME Fund

Website

https://www.africinvest.com/

Domicile

Mauritius

AfricInvest SME Fund is a private equity fund that will support fast-growing SMEs in North and sub-Saharan Africa. The fund has a target size in the range of USD 150-180 M and will invest equity tickets of EUR 4-15 M to acquire influential minority and opportunistically majority positions in approximately 15 small-sized companies with a focus on growth investments, but also buy-outs across a variety of sectors.

The fund aims to achieve adequate financial return, while leveraging AfricInvest’s internal capabilities to deliver on its ambitious social and environmental development impact targets.

The manager of the fund, AfricInvest, is a long-standing partner of BIO and a leading pan-African, multi-asset investment platform founded in 1994 that has raised and managed 21 Private Equity (PE) and Venture Capital (VC) funds since inception and presents a compelling track record. Through this vehicle, the manager confirms its strategic positioning to financing SMEs, which represent half of Africa’s GDP and 80% of its employment.

Development impacts

Local economic growth
The Fund will provide long-term, flexible, growth capital to ~15 MSMEs with solid foundations and high growth potential in sectors where the fund manager has a proven experience. The fund shall directly sustain 5,000-6,000 jobs and create up to 1,000-2,000 jobs in its heyday across various sectors (including agribusiness, manufacturing and services, healthcare, education and pharma), while promoting social goals of decent work, adequate living standards and wellbeing of end-users.
Private sector consolidation/innovation
The SME Fund will benefit from AfricInvest’s strong expertise and knowledge of the continent and rich experience in SME investing.

AfricInvest is one of the most established and reliable SME fund managers in Africa with 30-year experience investing in Africa, an extended physical presence across Africa with 8 local offices (Algeria, Egypt, Kenya, Ivory Coast, Morocco, Mauritius, Nigeria and Tunisia), a strong team of 100+ investment professionals and 100+ investments in SMEs since inception.

The fund Manager will adopt a hands-on approach to value creation, further institutionalizing its portfolio companies, providing strategic guidance, improving business operations, and assisting them to raise additional financing and/or expanding abroad.
Promotion of ESG best practices
Strengthening the effectiveness of the fund's high ESG and Impact ambition and management thanks to BIO's ESAP (e.g. Environmental and Climate Policy, ESMS upgrade, etc.), rely on the existing well-equipped in-house ESG team supported by external experts for due diligence, as well as systematic identification of ESG opportunities and ESAP requirements.
Financial additionality
BIO's participation in the first closing will contribute to support the fund in maintaining a strong fundraising momentum, and thereby reach its target size.
Non-financial additionality
BIO has actively participated alongside other anchor investors in the structuring of the fund.

E&S Impact

The Environmental and Social Management System (ESMS) will be updated to add OECD and IFC frameworks, further specify procedures for including external environmental and social (E&S) specialists in the due diligence process and provide additional guidance on E&S monitoring procedures. The client has agreed to develop emergency preparedness and response plans for all buildings it owns, leases or operates, as well as a stand-alone environmental and climate policy. Finally, sustainability training will be provided to AfricInvest employees appointed to the boards of companies in the SME fund's portfolio.

Situation at the time of investment

AfricInvest has an ESMS that outlines management procedures throughout the investment cycle. Overall, this is considered as an adequate system for handling ESG issues during the investment cycle. AfricInvest has a qualified E&S Team, comprising a Head of Impact and Sustainability, and an Environmental and Social Fund Officer. AfricInvest also runs an annual training programme on ESG issues dedicated to investment officers.

Risk Category: B