Private Equity News & Analysis

CDC, OPIC eye Standard Bank debt fund

The emerging markets bank is raising a ‘new and unique’ fund to stimulate the debt capital markets in Sub-Saharan Africa.

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CDC Group is currently among those considering a commitment to an African debt fund being launched by emerging markets specialist Standard Bank.

The Sub-Saharan Africa Debt Capital Markets Fund, a joint venture between Standard Bank and the Dutch development bank FMO, aims to raise between $100 million and $150 million for a first close by the end of the year, said Alia Yousuf, head of emerging markets debt with Standard’s principal investment management team.

The remit of the fund is to develop the private sector capital markets in Sub-Saharan Africa, excluding South Africa. It will lend long term capital to medium-sized businesses in the region.

Yousuf declined to comment on the potential returns the fund would generate, in part because it is “a new market and a unique type of fund”, she said in an interview.

Yousuf added that the bank was in talks with a number of development finance institutions in connection with the fundraising, but declined to identify them. The bank is also looking for purely commercially focused investors.

CDC Group, a private equity-focused fund of funds owned by the UK government, confirmed it is in talks with Standard. “It is difficult in parts of sub-Saharan Africa for promising businesses to raise debt,” said a spokesman for the organisation, “So we are actively looking at investing in debt funds such as those being proposed by Standard Bank and other providers.”

There is a shortage of debt in Sub-Saharan Africa for private businesses.

Richard Laing

The spokesman added that CDC is already helping provide credit lines for trade finance through a $75m investment in the World Bank’s Global Trade Liquidity Programme.

OPIC, a US government development agency, is also considering a commitment to the fund, according to literature published on its website.

In an interview with PEO in April, CDC’s chief executive Richard Laing indicated his organisation’s plans to enter the African debt markets.

“There is a shortage of debt in Sub-Saharan Africa for private businesses,” said Laing, adding that the logical managers for funds providing credit to private businesses would be banks, “who have the network and distribution capabilities to deploy the debt”.