West African fund targets up to $500m

African Capital Alliance has attracted a $50m commitment from UK government-owned fund of funds CDC Group.

Development-focused fund of funds CDC Group has made a $50 million commitment to CAPE III, a private equity fund targeting up to $500 million for investment in West Africa.

The fund is being raised by African Capital Alliance (ACA), a Lagos-based private equity firm founded in 1997. ACA’s first two funds raised $35 million and $100 million respectively. The latter of these closed in 2005 and

Lagos: 'opportunities have never been brighter'

has deployed most of its capital in investments such as Virgin Nigeria Airways, Nigeria’s flag carrier, and Cornerstone Insurance, a Nigerian life and general insurance company.

Investments from Fund III will be made in various sectors predominantly in Nigeria, with a small proportion directed to other West African nations.

“With fiscal, banking and transparency reforms, the opportunities for putting private capital to work have never been brighter in Nigeria’s history,” said Jean-Marc Savi de Tove, CDC’s portfolio director for Africa.  “We have invested with ACA since they launched their first fund, CAPE I, in 1998, which proved successful in providing capital to small and medium sized enterprises.”

This is the first African fund commitment made by CDC since the fund of funds had its investment criteria honed by the UK government’s Department for International Development, CDC’s owner.

Under the new investment policy, which came into effect in January this year, 75 percent of CDC’s new investments must provide capital to the world’s lowest income countries with an annual gross national income per head of less than $905.