AfricInvest secures up to €25m from CDC

The commitment comes shortly after AfricInvest held a first close of more than €154m for its third fund

UK-based development finance institution CDC has allocated up to $40 million to two Africa-focused funds, according to a statement.

CDC has committed up to €25 million to AfricInvest Fund III and up to $15m to Synergy Private Equity Fund.

AfricInvest Fund III and Synergy will target companies across “a broad variety of sectors that show significant potential to grow from a local presence to a regional or continental level, with individual investment sizes likely to range between $5 million to $15 million”, CDC said. AFIII will invest across the continent while Synergy will focus on Nigeria and Ghana.

Synergy Private Equity Fund is the first fund to be raised by Synergy Managers, a first-time team based in Lagos and Accra. The debut vehicle, which has a $75 million target, will invest in small and mid-cap companies in sectors including manufacturing, agro-processing, non-bank financial services, ICT and energy services in Nigeria and Ghana.

CDC has now made three African fund commitments in 2014, having allocated $40 million to Investec Africa Private Equity Fund II earlier this year. CDC’s Africa portfolio now consists of 58 funds with total commitments of $2.3 billion.

The commitment to AfricInvest’s Fund III comes just days after the firm held a first close of more than €154 million, AfricInvest said in a separate statement. The vehicle, which is aiming to collect €200 million for investments across the continent, will focus on North, West and Eastern Africa. Target sectors will include manufacturing and agribusiness, retail, education, pharmaceuticals, financial services, packaging and telecoms.

“The focus of AfricInvest Fund III and Synergy on small and mid-sized businesses is important to CDC because we recognise the challenges that growing companies in Africa face when raising long-term growth capital. We want to see businesses that are local champions go up a level to become national and regional successes,” Dolika Banda, CDC’s regional director, Africa said in the statement.

CDC, which is the UK government-owned development finance institution, uses its own balance sheet to invest in developing countries in Africa and South Asia. It has net assets of £2.8 billion.