GroFin has held the final closing of the GroFin Africa Fund at USD170m against a target of USD150m.
GroFin has held the final closing of the GroFin Africa Fund at USD170m against a target of USD150m.
The fund targets start-up and growth opportunities in small and medium enterprises in Africa.
It will be invested in roughly 500 companies over a period of five years, making it the largest growth finance fund to date globally. It invests between USD100,000 to USD1m in SMEs operating in various sectors of the economy ranging from manufacturing to retail and services.
This is GroFin’s fourth fund for Africa focusing on making risk finance and business support available to entrepreneurs. To date the fund has committed USD17m to 50 transactions and is currently considering investment into a further 24 companies to the value of USD8m. The fund invests in Nigeria, Ghana, Rwanda, Kenya, Tanzania, Uganda and South Africa through GroFin’s in-country investment teams.
Following a first close of USD140m in the fourth quarter of 2008, recent commitments by the European Investment Bank and Proparco (AFD Group), through the Investment and Support Fund for Businesses in Africa, brought about the final close of USD170m. The EIB and Fisea join African Development Bank, CDC, International Finance Corporation, FMO, Norfund, Shell Foundation and GroFin Investment Holdings as investors to the fund.
Jurie Willemse, managing director of GroFin, says: ‘This is a clear demonstration of the high levels of interest that investors have for smaller investments in Africa that deliver both quantifiable investment and development returns. The confidence shown in the GroFin team and our unique business model, that integrates risk finance with business development assistance to mitigate the investment risk, is heartening.
‘The Africa enterprise sector represents an exceptional investment and development opportunity at this time and has illustrated resilience through the economic crises. There are an ever growing number of entrepreneurs in Africa looking to start and grow companies and our viability based model – specifically developed for the African market – makes real returns possible in a segment that is overlooked by most investors.’
Michel Jacquier, chairman of Fisea, adds: ‘We are confident that through the GroFin Africa Fund sustainable SMEs will develop on a scale never seen before in Africa. Smaller companies in Sub-Saharan Africa are still struggling to raise external finance. In fact, lending to SMEs is hindered by high transaction costs and a lack of interest as this sector is perceived as more risky and less profitable. By targeting companies in need of growth finance, this fund will help to address this shortage.’
