AFRICA – CDC, UK’s development finance institution, announced a new commitment of US$75 million to the Africa Development Partners II LP Fund (ADP II), managed by Development Partners International (DPI).
The Fund will invest throughout Africa, providing much-needed risk capital to businesses to help them grow, develop and increase the contribution they make to their local economies, including providing employment.
The ADP II fund will take significant minority stakes in businesses across a range of sectors, focusing on high growth companies that are seeking to expand into newly liberalising countries, such as Angola, Ethiopia, Mozambique and Rwanda, the economies of which are expected to grow at 7%+ between 2012-2017.
Deal size will range from US$20m to US$70m.
While ADP II will be sector agnostic, its strategy will focus on well-managed African companies that can benefit from strong growth in industries that cater to the requirements of the emerging middle-classes.
Industries that will be targeted by ADP II include FMCG, financial services, retail, logistics and healthcare. DPI is an active investor, which adds value to its investees not only through its financial backing, but also through active Board participation and the implementation of good environmental social and governance (ESG) practices.
Commenting on the commitment, Jeremy Cleaver, CDC’s Portfolio Director for its Africa Funds team said: “DPI has retained its focus on growth transactions in newly liberalising economies.
“As a development finance institution with a focus on supporting the building of businesses to create jobs across Africa, it’s vital for CDC that our investment partners are able to invest and deliver strong financial returns in less developed markets as well as more developed economies such as Kenya and Nigeria.”
“CDC’s US$75m commitment at first close, which equals its largest single commitment of 2012, signals its continued confidence in the market and the DPI team, and aims to catalyse further commitments from other private sector investors.”
DPI was set up in 2007. CDC invested in its first fund, ADP I, which raised US$R301m in 2008.
ADP I has successfully expanded businesses out of their primary markets into less developed countries.
For example, investee company Letshego, a financial services provider originally based in Botswana now serves over ten countries, including South Sudan and Rwanda. It now provides 145,000 customers with access to finance.
