African private equity fund manager Ascent has held the first rolling close of its Ascent Rift Valley Fund II (ARVF II) at more than USD100 million, significantly exceeding its initial target of USD80 million. The final close of ARVF II, with a target of USD120 million, is expected in December 2021.
ARVF II will invest equity in leading small and medium-sized enterprises (SMEs) in Eastern Africa, looking to take large minority or majority stakes. The fund will provide funding to scalable SME businesses, helping to drive wider business and industrial development, particularly targeting the financial services, manufacturing, wholesale and retail trade and services, education, healthcare, and agro-processing sectors. ARVF II seeks to invest in growing companies with the courage and ambition to become best-in-class, thereby creating a league of “regional enterprise champions” in East Africa. ARVF II has already made its first investment into financial services in January 2021.
Investors in ARVF II include leading Africa investors such as BIO (Belgian Investment Company for Developing Countries, CDC Group (the UK’s development finance institution), FMO (Dutch entrepreneurial development bank), IFC (the International Finance Corporation), Norfund (the Norwegian investment fund for developing countries), Proparco (a subsidiary of Agence Française de Développement (AFD) focused on private sector development through AFD Group’s FISEA fund), SDG Frontier Fund, impact investors and major Kenyan pension funds.
“We are proud to have raised this additional capital from prominent investors to invest in Africa’s most promising companies,” says David Owino, Founding Partner of Ascent. “We are now well positioned to become the leading SME fund manager in East Africa, empowering ambitious entrepreneurs with capital and knowledge from our local advisory teams.”
“I am thrilled to see both existing investors from ARVF I and new investors come together to underwrite our vision of building strong East African companies,” adds Ascent’s Founding Partner Lucas Kranck. “The fact that we were able to mobilise capital for these markets amidst a global pandemic is testament to their enormous potential.”
ARVF II will promote environmental, social and governance best practices in its portfolio companies in order to drive growth and value, create quality jobs, limit environmental impact, increase government tax revenues and further empower local economies.
“We are thrilled that our investment in ARVF II will enhance Ascent’s ability to offer capital to promising SMEs, which significantly contribute to business activities and employment of a large proportion of the working population in East Africa”, says Sara Taylor, Head of SME Funds at CDC Group, said. “With CDC’s investment in ARVF II, we are pleased to be partnered with a GP that has a track record of supporting the growth of SMEs. CDC has built a collaborative partnership with Ascent that spans over six years, and we’re glad to continue to back its growth – helping to usher in increased capital that will bolster sustainable economic growth across the region.”
“With this investment in Ascent’s second fund Proparco is proud to support an increased access to Private Equity for the East African SMEs. Thanks to its decentralised organisation (with local offices in Kenya, Ethiopia and Uganda), the Ascent team has demonstrated its ability to support local entrepreneurs in expanding their business while concurrently fostering the implementation of high ESG standards. The French initiative Choose Africa, which the AFD Group has been deploying since 2018, relies on such talented and committed partners to best support startups and SMEs on the African continent”, says Tibor Asboth, Deputy Head of Equity, Africa & Middle East at Proparco.
“IFC’s support for the Ascent Rift Valley Fund II is a vote of confidence in the dynamism of SMEs in East Africa and comes as the region is working to recover from the economic impacts of Covid-19. Supporting entrepreneurship and smaller businesses is a major pillar of IFC’s strategy in Africa because it contributes significantly to job creation and economic growth,” says Amena Arif, IFC Country Manager for East Africa and Malawi.
Jaap Reinking, Director Private Equity at FMO, says: “We are very pleased to commit to Ascent Capital’s second fund. By doing so we support a very trustworthy and capable private equity fund manager active in supporting SMEs with risk capital in Kenya, Uganda and Ethiopia. These East African countries are growing rapidly and need equity capital to get through and recover from the temporary economic development setback due to the pandemic.”