WEST AFRICA – The Board of the African Development Bank (AfDB) has approved a €12.5 million equity investment in Adiwale Fund 1 targeting high growth potential Small and Medium Sized Enterprises (SMEs) in French speaking West African countries.
With a target fund size of US$84.3 million, the first-generation private equity fund will take minority stakes in SMEs that are well established in their markets, have competitive advantage and can rapidly scale up.
The geographical focus of the Fund will be on a handful of countries where economic prospects, and the Fund’s networks, result in opportunities with the average deal size for the Fund ranging from US$3.37 to US$8.99 million.
Its Primary target countries will be countries underserved by the global private equity (PE) market such as Cote d’Ivoire, Senegal, Burkina Faso and Mali while secondary target countries will include Togo, Benin and Guinea.
The Fund will focus on three key sectors; consumers (comprising consumer goods and services, education and health); business services (transport, logistics, IT, internet services, construction-related services) and manufacturing (pharmaceuticals, agri-processing, chemicals inter alia).
“The Bank’s investment in Adiwale Fund 1 would enhance the availability of financing and capacity support for SMEs in Francophone West Africa,” said Alhassane Haidara, Divisional Manager of Non-Sovereign Industries and Services at the African Development Bank.
With support from the Bank, the Fund is expected to drive value creation in investee companies through improvements in internal functions and implementation of best-governance practices across the economies.
The investment is aimed at promoting development by providing growth capital to African SMEs, resulting in spill-over effects on job creation (direct & indirect, skilled & unskilled, men & women) and tax revenues.
Additionally, it will also boost best-in class corporate governance and human capital development, which ultimately unlocks top line growth and supports economic transformation.
Established in 2016, the Fund Manager, Adiwale Partners, houses a team of experienced West African nationals with several decades of combined private equity, operational, development finance and asset management experience in Africa, Europe and the United States.
AfDB said that the investment is part of the Regional Integration Strategy Paper for West Africa that aims to foster regional integration by investing in companies which will grow to become regional economic players.