Citigroup is teaming up with CDC, the UK government owned fund of funds investor, to launch a $200 million (€155 million) private equity fund for investments in Africa.
CDC is committing $100 million, which Citigroup will match. Citigroup Venture Capital Investments, the bank’s venture arm, will manage the fund, which will be used to make growth capital investments throughout Africa.
CVCI expects to target later stage companies in a number of sectors, including telecoms, pharmaceuticals, IT, retail and energy, typically investing between $20 million and $60 million per transaction.
According to the African Venture Capital Association, private equity investment in the continent increased by 19 percent in 2005, with deal size up more than 60 percent, to $2.9 million.
This latest commitment means CDC has now invested nearly $1 billion in private equity funds focused on Africa. It has previously committed over $800 million to Actis, a specialist emerging markets investor, through four separate funds.
CDC, through Actis, and Citigroup have already collaborated successfully with their investment in Celtel, a pan-African mobile operator that was sold to a Kuwaiti group for $3.4 billion in 2005, yielding a five times return for CDC.
Citigroup already has a substantial private equity operation in emerging markets. It is currently spending a $1.7 billion fund, which closed in 2005 and has made three investments in Africa. It is also expected to raise another $3 billion fund earlier this year.