FMO, Norfund, Rabobank create African finance company

Arise will provide growth equity and target financial service providers working with rural communities in 20 sub-Saharan countries.

Dutch development bank FMO, the Norwegian Investment Fund for Developing Countries (Norfund), and Rabobank are setting up a new $660 million investment manager called Arise that will take minority stakes in African financial service providers, PEI's sister publication Agri Investor reported Friday.

The three European lenders said that their goal is to develop an “effective, inclusive” financial sector in Africa by investing in financial service providers that serve several key groups: rural businesses and clients who have not had access to financial services in the past, as well as retail customers and small and medium enterprises in 20 sub-Saharan countries. 

FMO, Norfund, and Rabobank will pool together the stakes that they already hold in regional banks, and will also make new investments. These growth equity investments are intended to build Arise's capital up to $1 billion within the next five years, Kjell Roland, managing director at the $1.8 billion Norfund, told Agri Investor . The fund could provide mezzanine or convertible funding in exceptional circumstances. Norfund and other Norwegian investors will provide 48 percent of funds in total, FMO 27 percent, and Rabobank 25 percent.

Arise, which will begin operations from 1 January 2017, will have one office in the Netherlands and one in South Africa, and its chief executive will be the current financial institutions head of department at Norfund, Deepak Malik.

Read more by visiting Agri Investor.