Medical Credit Fund raises US$36m for its second fund, MCF II

AFRICA – Medical Credit Fund (MCF), the only debt fund fully dedicated to the African health sector, has completed a €32.5 million (US$36.71m) fundraise of its second fund, MCF II.

Through blended finance, MCF uses catalytic capital from both public and private sources and is targeting to grow to €80 million (US$90.36m) in the next few years.

This financing round will expand the Fund’s presence and support to healthcare providers in sub-Saharan Africa, with a focus on primary healthcare services including malaria prevention and treatment and maternal and childcare.

The round also caters for expanding its fully digital loan product called ‘Cash Advance’, which grew exponentially in the past two years.

The funding round was anchored by the Dutch Ministry of Foreign Affairs, which provided the first equity injection of €7.5 million (US$8.47m) in January this year, to cater to the demand for loans during the heights of the COVID-19 crisis.

 Also participating in this funding round are CDC Group with €10 million (US$11.30m), FMO with €7.5 million (US$8.47m), Swedfund with €5 million (US$5.65m) and Philips with €2.5 million (US$2.82m).

“I am very grateful for the support we received from our investors, especially the Dutch Ministry of Foreign Affairs,” Arjan Poels, Managing Director of MCF, said.

“The funds will help to bridge the financing gap for small and medium-sized health businesses, allowing entrepreneurs to finance construction work, purchase equipment, and prevent medicine stock-outs. Mitigating the chronic underfunding of the sector means more patients can receive better healthcare.”

In addition, MCF will benefit from a guarantee facility by DFC, which was initiated by the Health Finance Coalition (HFC) with support of the US President’s Malaria Initiative (PMI) and USAID’s Center for Innovation & Impact (CII).

“Affordable, reliable and quality health care has never been more crucial than it is today,” Clarisa De Franco, Managing Director & Head of Private Equity Funds, CDC Group, said.

“Our commitment to MCF II will enable the Fund to increase its flexible finance offers to an estimate of over 2,500 healthcare SMEs, bolstering their ability to meet the increased demand for quality healthcare and to serve approximately 10 million patients by 2030.”

Since its foundation, Medical Credit Fund has provided over 6,500 loans to healthcare providers in Africa, worth over €120 million (US$135.54m), with a 96% repayment rate.

It has reached 1,800 health small and medium-sized enterprises (SMEs) in Kenya, Ghana, Nigeria, Tanzania and Uganda.

“We’re pleased to have contributed to this one-of-a-kind Fund targeting healthcare SMEs through our Building Prospects and MASSIF funds in the form of a subordinated debt facility,” Marnix Monsfort, Director Financial Institutions at FMO, said.

“As the Fund is aimed at reducing inequalities in several of our core markets, with a strong gender focus, we believe the Fund is uniquely positioned to play a leading role in the healthcare space and are proud to have been one of the investors for the launch of the second Fund.”

MCF II qualifies under the 2X Challenge as its funding will enhance access to capital for gender-smart healthcare businesses and help to increase health services for female patients.

MCF will deploy the funding to further scale its impact across sub-Saharan Africa with a focus on advancing its digital loan products.

“Small and medium-sized private health facilities are crucial to increasing access to healthcare in Sub-Saharan Africa, especially for women and children,” Audrey Obara, Head of Healthcare at Swedfund, commented.

“MCF has a responsible lending approach that strengthens health SMEs to provide better quality healthcare and operate financially viable enterprises.

“Therefore, the investment in MCF II is well aligned with Swedfund’s goal to support sustainable businesses that improve access and quality of health care for underserved patients across the sector value chain. We are also pleased that the fund has a strong digitalization focus and qualifies as a 2X investment.”

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