International Finance Corporation (IFC) plans to make an equity investment of up to $30 million (Sh3.87 billion) in a pan-African private equity fund focused on small and medium sized enterprises in markets such as Kenya.
The amount will be invested in Adenia Entrepreneurial Fund I (AEF I), which is headquartered in Mauritius and has five regional offices covering Kenya, Madagascar, Morocco, Nigeria and South Africa.
IFC said it is also ready to co-invest with the fund to the tune of $20 million (Sh2.58 billion) where the asset manager will be in charge of running the portfolio.
The commitments will offer a boost to the fund, which is targeting to raise between $150 million (Sh19.35 billion and $180 million (Sh23.2 billion).
“IFC will play a catalytic role as an anchor investor for AEF I, helping the fund complete its first close. The co-investment envelope will also help the fund attract additional follow-on equity capital,” said IFC in latest investment disclosures.
In October last year, Adenia announced it was going to acquire insurance broker Minet as part of a pan-African deal that also expands its Kenyan portfolio, which includes supermarket chain QuickMart Limited, Red Land Roses and Africa Biosystems Limited.
The fund targets growth equity investments in 10 to 12 small-cap companies with amounts ranging from $10 million (Sh1.29 billion) to $20 million (Sh2.58 billion). Adenia has been in existence for over 22 years, raising a cumulative $950 million (Sh122.55 billion) over this period.
IFC says the fund is expected to increase access to private equity capital and value-creation for small-cap companies in Africa.
Adenia will need to attract additional investments by riding on IFC investment giving comfort to global investors looking to participate in the African-focussed PE market.
“Beyond the project, the fund's success will also showcase the viability of the small-cap regional private equity model as an opportunity for international investors to re-engage with the African PE market. This will, in turn, encourage other fund managers in the region to raise new or follow-on funds of greater scale and catalyze new PE activity across the region,” said IFC in latest disclosures.
