Private equity arrives in Afghanistan

Two government-backed investors have committed capital to InFrontier, Afghanistan's first private equity fund.

Two government-backed development finance institutions have backed what is being described as the only private equity fund focused on Afghanistan.

The InFrontier Afghanistan Fund – which has raised capital from the UK’s CDC Group and the Dutch Good Growth Fund, an initiative of the Dutch Ministry of Foreign Affairs – has held a first close on $22 million.

The fund will invest in “established businesses that have the potential to become market leaders in the country”, the two organisations said in a joint statement this morning. It will invest in multiple sectors.

“Private sector investment is the most effective and sustainable form of development in a post-conflict economy such as Afghanistan,” said Felix von Schubert, director at InFrontier.

The team behind the fund have already made a number of investments, including in the country’s first and largest pharmacy chain.

Diana Noble, chief executive officer at CDC, described Afghanistan as “a tough environment in which to operate”, saying they had been impressed by InFrontier’s “commitment, their understanding of the market and their strong local relationships.”

“CDC’s $15 million investment will support the Afghan economy by increasing access to finance, boosting job creation and potentially attracting new private sector investors,” Noble added.