Dawson’s Jacana makes investment debut

The investment and advisory firm has invested in Nairobi-based InReturn and will make a 'small' commitment to the firm's $20m fund.

Jacana Venture Partnership, which invests in mid-market private equity firms in Sub-Saharan Africa, has made its first investment. Jacana has bought a minority stake in Nairobi-headquartered InReturn, which will benefit from both Jacana’s capital and expertise.

Founded in 2008 by a team that includes venture capital veteran Stephen Dawson, Jacana aims to support small- and medium-sized enterprises in Sub-Saharan Africa by investing in new and emerging private equity GPs who will, in turn, invest in regional SMEs.

Stephen Dawson

It is hoped these managers will help fill “the missing middle”: the perceived financing gap between the upper-end commitments of microfinance providers (usually around $100,000) and the minimum commitments that can be made by private equity firms (normally $2 million).

Dawson, formerly managing director of private equity firm ECI Partners and now chairman of Jacana, and Jacana chief executive officer Simon Merchant, will both sit on InReturn’s board. Jacana’s Robert Jenkins, in his capacity as a mentor and advisor to InReturn, is currently assisting in the firm’s expansion in Tanzania, where it is opening a new office at the end of the month.

InReturn invests in SMEs in Kenya, Tanzania and Uganda in sectors such as food processing, ICT and manufacturing.

In an interview with PEO, InReturn’s managing partner Bart Meijs said that the firm had just agreed a memorandum of understanding with Netherlands-based development organisation SNV in order to source deals throughout East Africa.

InReturn is targeting $20 million for its current fund. Simon Merchant from Jacana confirmed that, in addition to its investment in the management company, it would also be “making a small commitment” to this fund.

Merchant described a “chicken and egg” scenario regarding the private equity sector in Sub-Saharan Africa. Emerging fund managers in the region are unable to attract foreign commercial interest without first mustering strong track records, but, conversely, this commercial capital is necessary to help the fund managers establish track records.