CDC Group has committed $50 million to African Capital Alliance’s third private equity fund, which will make control and non-control investments into mid-sized companies in Nigeria and other West African and Gulf of Guinea nations.
CDC Group plc (“CDC”), the UK’s development finance institution, is committing US$50m to African Capital Alliance’s (“ACA”) Private Equity Fund III (“Cape III”), CDC’s second investment under its new investment policy, which is focused on investing in the world’s poorest countries.
The fund will develop and grow mid-sized companies in Nigeria, with minority and majority investments between $30m and $50m. Up to 25% of investments will also be directed towards other parts of West Africa and the Gulf of Guinea region.
CAPE III will back companies that stand to benefit from regulatory changes in Nigeria. For example, with less than 50% of the Nigerian population lacking access to energy, the electric power sector in Nigeria is in need of investment. Deregulation and reform in the sector are providing opportunities for new entrants to this market, and it is here that CAPE III will make some of its investments.
Jean-Marc Savi de Tove, CDC’s Portfolio Director, Africa, said:
“As the global downturn bites, companies are finding it increasingly difficult to get access to the finance that is central to their development. CAPE III’s capital injection into promising businesses in Nigeria and its neighbours will allow for stronger capital structures and also help investee companies obtain debt financing from banks – another important driver of economic growth.
“With fiscal, banking and transparency reforms, the opportunities for putting private capital to work have never been brighter in Nigeria’s history. We have invested with ACA since they launched their first fund, CAPE I, in 1998, which proved successful in providing capital to small and medium sized enterprises. The team has a strong track record of working with entrepreneurs and management teams to build value in companies, which ultimately drives economic growth.”
Under CDC’s new investment policy, which came into effect on 1 January 2009, 75% of CDC’s new investments will provide capital to the world’s lowest income countries with an annual gross national income per head of less than US$905.
CDC Group plc
CDC is a government-owned development finance institution with net assets of £2.3bn.
It uses its own balance sheet to make investments focused on the emerging markets of south Asia and sub-Saharan Africa.
CDC’s mission is to stimulate economic growth by providing capital for investment in sustainable and responsibly managed private sector businesses.
ACA is an independent private investment firm formed in 1997 by six founding partners to promote private sector led investments in Africa to capture attractive investment opportunities. CDC has played a central role in supporting ACA’s development, providing advice to the company during its establishment as a well-respected Africa fund manager.