GroFin announce final close of the GroFin Africa Fund at $170 million.
GroFin today announced the final closing of the GroFin Africa Fund at US$170 million against a target of $150 million. This growth finance fund targets start-up and growth opportunities in small and medium enterprises in Africa.
The GroFin Africa Fund will be invested in roughly 500 companies over a period of five years, making it the largest growth finance fund to date globally, which is a remarkable achievement for Africa.
It invests between $100,000 to $1 million in SMEs operating in various sectors of the economy ranging from manufacturing to retail and services. These firms often struggle to grow because of a lack of access to capital and business development assistance, and as a result, Africa misses out on a significant engine of economic growth.
This is GroFin’s fourth fund for Africa focussing on making risk finance and business support available to entrepreneurs. To date the fund has committed $17 million to 50 transactions and is currently considering investment into a further 24 companies to the value of $8 million. 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 $140 million in the fourth quarter of 2008, recent commitments by the European Investment Bank (EIB) and PROPARCO (AFD Group), through the Investment and Support Fund for Businesses in Africa (FISEA), brought about the final close of $170 million .
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 said: “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.”
EIB Vice President responsible for the Bank’s activities in sub-Saharan Africa, Plutarchos Sakellaris, said, “SMEs constitute a powerful driving force of the African economy and it is essential to ensure that tailored funding is available to support their continued growth, particularly during the current financial crisis. We at the EIB are proud to invest in such a focussed fund that serves a number of African countries and we are confident that GroFin has developed the necessary expertise to guarantee its success.”
Michel Jacquier, chairman of FISEA said, “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.”
The Growth Finance sector is an essential yet underserved market in developing economies with many small and medium enterprises failing due to a lack of capital and appropriate management skills. GroFin leads development in this sector through the provision of both appropriate funding and extensive business development support to enhance the probability of success for entrepreneurs and their businesses.
Notes to the Editor:
About the EIB
The European Investment Bank (EIB) is instrumental in implementing the EU's development and economic cooperation policy in countries outside the Union. The EIB has been a development partner in many African, Caribbean and Pacific (ACP) countries since 1963 through a series of lending mandates from the European Council.
EIB loans in the ACP regions concentrate on fostering private sector-led initiatives, including SME investments, that promote sustainable economic growth and help to reduce poverty. The Bank also supports public sector projects that are critical for private sector development and the creation of a competitive business environment.
About Grofin
GroFin is a multi-national specialist SME finance and development company offering an innovative combination of risk capital and business development assistance to viable enterprises. GroFin is committed to assisting small and medium enterprises (SMEs) achieve sustainable profitability, believing that growth in this sector is vital for socio-economic development in emerging markets.
We invest responsibly in viable businesses, providing unique solutions for each client which are tailor-made for their specific needs. Besides individualised financial support, we empower entrepreneurs through sharing skills and transferring business knowledge. This unique combination of money and mentoring assists entrepreneurs maximise profitability and encourages sustainability and success.
About PROPARCO, FISEA
PROPARCO is the Investment and Promotions company for Economic Cooperation. Created in 1977, PROPARCO is a Development Financial Institution partly held by Agence Française de Développement (AFD) and private shareholders from the North and South. PROPARCO’s mission is to be a catalyst for private investment in developing countries which targets growth, sustainable development and reaching the Millennium Development Goals (MDGs).
The FISEA fund is one of the realisations of the initiative to promote growth in Africa which President Nicolas Sarkozy launched on 28 February 2008. The fund aims to promote growth of African SME’s by giving them access to equity capital and by helping them build their capacities. The 250 million euro fund is held by Agence Francaise de Développement (AFD) and managed by PROPARCO, its private sector investment arm.
About Growth Finance
Growth finance focuses on the so-called ‘missing middle’ – the gap that exists between micro-finance, which tends to cater for informal entrepreneurs needing less than $50,000, and commercial banks and private equity, who prefer to finance larger companies which require over $1 million. The international development sector has long sought to find financially viable ways to support this sector – so that entrepreneurs can grow their businesses and create sustainable employment. All GroFin-backed entrepreneurs receive extensive support building their businesses – as well as risk capital.