The International Finance Corporation (IFC), a unit of the World Bank Group, has provided a $15 million (€9.6 million) anchor investment for African private equity fund Atlantic Coast Regional Fund which has held a first close on $75 million. The fund is targeting $150 million.
“There are very few private equity funds of institutional quality fundraising for Africa and there are even less funds trying to target the Francophone zone,” said Sergio Pombo, an investment officer in IFC's private equity and investment funds department.
The Dakar, Senegal-based fund is the first private equity fund managed by local professionals with a primary focus on francophone Africa, according to the IFC. The fund’s chief executive is Papa Ndiaye, previously the founder and chief executive of Advanced Finance and Investment Group, a Johannesburg-based private equity fund management company. Earlier, he was a director of the Africa-focussed private equity group of Emerging Markets Partnership which is now Emerging Capital Partners.
The francophone countries have been severely lacking in long-term equity investors, said Pombo. The majority of investors in the region are currently invested in debt.
The Atlantic Coast Regional Fund will invest approximately one-third of its capital in small- and medium-sized enterprises (SMEs) with the remainder invested in mid-cap companies. The geographic scope of the fund includes the approximately 10 African Francophone countries as well a handful of additional countries including Nigeria and Ghana.
The IFC began conducting due diligence on the Atlantic Coast Regional Fund team approximately one year ago, ultimately becoming the fund’s first investor. “Just by the fact that IFC has been an early investor will most definitely open doors…with institutional investors,” said Pombo.
The fund’s management team adopted IFC standards for environmental responsibility, corporate governance, anti-corruption, and anti-money laundering. All funds receiving capital from the IFC must adopt either IFC standards or similar local standards as a pre-requisite for investment. The IFC will maintain an active advisory role throughout the life of the fund.
Current investors in the fund include several other development institutions with which the IFC shared its due diligence. Pombo expects the fund’s investor base to be split approximately evenly between development institutions and private investors at the completion of fundraising.
The IFC has committed more than $1 billion across greater than 160 private equity funds in developing countries. The investment in the Atlantic Coast Regional Fund is intended to support the organisation’s regional strategy of developing SMEs and institutions that support SMEs.
The group’s mission is to foster sustainable economic growth in developing countries by financing private sector investment, mobilising private capital in local and international financial markets and providing advisory and risk mitigation services to businesses and governments.