Nigeria-based CBO Investment Management, which is targeting investments in small and medium-sized enterprises in West Africa, expects to hold a first close on its $150 million debut fund in the first quarter of next year.
“It might slip into second quarter,” CBO managing partner Bekuochi Nwawudu told Private Equity International.
The firm is understood to be targeting a first close on $40 million. It is talking to a diversified base of limited partners across the US and Europe, including funds of funds, pension funds, endowments and family offices, as well as African pension funds, insurance companies and sovereign wealth funds that are new to private equity.
It expects that the first close of the CBO Growth Private Equity Investments Fund will include a “decent slug” from local pension funds, Nwawudu said.
In Nigeria, pension funds have $24 billion in assets under management, he noted. “We feel that the key thing is that they allocate their resources to the growing sectors of the economy so they can meet their requirements. Across Africa, the figure is more significant.”
The firm has hired former International Monetary Fund (IMF) investment unit chief Gary Steinberg as head of its advisory board and a member of its investment committee.
Steinberg was head of the IMF unit for six years, where he oversaw the management of a $20 billion portfolio. He was also previously the chief investment officer at the Wellcome Trust, chief of BP’s pension plan, and non-executive director at SVG Capital.
Steinberg’s appointment “is a strong endorsement for our West Africa strategy,” Nwawudu said.
To date the new fund has secured two investments totalling $30 million in agri business Union Dicon Salt and equipment business Coastal Hire, according to its website. It has another four to six under review.
The firm is targeting companies of $2.5 million to $15 million, focusing on growth, and is “happy with a minority stake with the right management. We are still more of a financial partner, not a buyout group,” Nwawudu said.
It has secured a loan from the US’ Overseas Private Investment Corporation to support its fund investments, the firm said in a statement.
In total, it has made eight investments and exited six. These include companies across its six target sectors of agri-business and food processing; manufacturing and import substitution; human capital services; technology and media; real estate services; and energy services, according to its website.
The firm’s previous investments were made off its balance sheet and included funds from family offices, corporates and bank debt, Nwawudu said.
“Launching our fund is synonymous with the development of SMEs, local funds and the private equity asset class in region,” Nwawudu said, noting that it has been building its deal pipeline since 2008. “This is different from teams who are spinning out or new entrants coming into the region for the first time.”