The European Investment Bank (EIB) will support private equity investment across Ethiopia though support for the new USD 100m Cepheus Growth Capital Fund. The EIB’s USD 10 million participation represents the first backing for an Ethiopia focused fund and one of the first engagements with a single country private equity fund in Africa by Europe’s long-term lending institution.
“The European Investment Bank is committed to fostering private sector investment across Africa. Our first support for private equity in Ethiopia, through the Cepheus Capital Growth Fund, will help leading local companies to expand and succeed. The fund manager’s significant financial experience and understanding of Ethiopia will ensure companies can unlock their true potential. With this new initiative the EIB will help Ethiopia, the second largest country in Africa, to meet key sustainable development goals and continue its recent impressive economic growth.” said Ambroise Fayolle, Vice President of the European Investment Bank.
EIB Vice President Fayolle this week visited Ethiopia on a two day visit. During his stay in Addis Ababa he met business leaders, entrepreneurs and diplomats, as well as Ethiopian government officials and representatives of the Economic Commission for Africa.
“Private equity investment will strengthen the growth of leading companies in Ethiopia and create new jobs across the country. This new cooperation with Cepheus demonstrates the European Investment Bank’s commitment to Ethiopia and support for economic growth across the country in the years ahead.” said Ambassador-Designate Johan Borgstam, Head of the European Union Delegation to Ethiopia.
The Cepheus Growth Capital Fund, founded by two Ethiopian born partners, will invest in private sector companies all over Ethiopia involved in manufacturing, consumer goods, agriculture and agro-processing. The fund is expected to invest between USD 3 million and USD 10 million in each company. The EIB participation in the Cepheus Growth Capital Fund was approved by the EIB’s shareholders in September and is expected to be finalised in the coming weeks in conjunction with support from other international investors.
The expected first ever support for private equity investment in Ethiopia was announced in June this year during a visit to Addis by Pim van Ballekom, EIB Vice President responsible for operations in East Africa.
Cepheus Growth Capital is led by Managing Partner Berhane Demissie. The Addis Ababa based operations team with significant African experience in private equity, banking and fund management will manage direct investments. Its investment strategy is focused on job creation and supporting social improvement.
During his visit to Addis Vice President Fayolle also addressed the African Microfinance Week conference alongside Prime Minister Hailemariam Desalegn. The African Microfinance Week is a bi-annual major conference dedicated to development of financial inclusion in Africa and is supported by the EIB. More than 300 organisations were represented at this year’s conference that focuses on enhancing microfinance support for youth employment.
In recent years the EIB has supported investment to improve water infrastructure across Ethiopia and provided credit lines to back private sector investment. The EIB is currently finalising support for mobile banking in Ethiopia, it is also examining possible future backing of off-grid solar investment and financing for renewable energy projects and industrial parks.
Over the last five years the European Investment Bank has provided more than EUR 10.1 billion for investment across Africa.
Cepheus is a local Ethiopian Fund Manager launching its first fund focused on Ethiopia where the private equity industry is nascent. The fund is incorporated in Mauritius and will focus on providing growth capital for Ethiopian SMEs with a focus on strong job creation and sustainable financial returns. The significant job creation will have an impact on the root causes of the migration crisis in this frontier country. The operation qualifies for the "Social Impact Funds" window of the Impact Fin
Small business across Ethiopia will benefit from a new 6.4 billion Birr (EUR 247 million) lending and leasing programme to be managed by the Development Bank of Ethiopia announced in Addis Ababa earlier today. The new initiative backed by the EIB and World Bank represents the first international support in the Ethiopian financial sector and the European Investment Bank’s largest ever engagement in Ethiopia. The new initiative will back financing for local companies by Ethiopian microfinance institutions, commercial banks and leasing firms.
At a ceremony held in Addis Ababa earlier today the European Investment Bank (EIB), Europe’s long-term lending institution, formally opened the bank’s first permanent representation in Ethiopia. The new office will lead engagement by the EIB, the world’s largest international public bank, both to support long-term infrastructure and private sector investment in Ethiopia and to manage relations with the African Union Commission and other international organisations based in the Ethiopian capital.