Adedapo Adesanya
By Adedapo Adesanya
The International Finance Corporation (IFC) has made an equity investment of $25 million in Metier Capital Growth Fund III (MCGF III), as well as a co-investment envelope of $15 million, to invest alongside the fund in select companies, in order to support the growth of mid-market companies in sub–Saharan Africa.
The fund, which will be managed by Metier Private Equity International, will invest in eight to 12 mid-market companies, primarily in Southern and East Africa. The fund will invest in sectors including telecommunications, fast-moving consumer goods, healthcare, non-banking financial services, manufacturing, as well as infrastructure and energy. MCGF III will invest at least 40 per cent of the fund outside of South Africa.
IFC’s investment will help the fund reach its first close and, through a co-investment envelope, enable the fund to attract more follow-on equity for its investee companies. IFC will also support Metier in strengthening its gender-lens investing approach and promoting gender diversity, both within the fund manager and its investees.
According to Mr Paul Botha, CEO and Co-Founder of Metier, “Beyond delivering top quartile returns, Metier’s core objective is to contribute towards positive and sustained impact across Africa.
“Our active deal pipeline is characterized by growth capital investments that will develop new business opportunities that will have a positive impact on the effects of climate change, create decent jobs with a broader focus on gender-lens investing, support the connectivity of rural communities, and enhance small business development across Africa. We are excited about our continued partnership with IFC.”
Private equity investment in Africa remains among the lowest in emerging markets, representing just 4 per cent of total volumes.
Challenges include perceptions of high risk, foreign exchange risk, high inflation, and economic uncertainty. As a result, equity financing for mid-market companies has been scarce, hindering the development of the private sector.
Adding his voice, Mr Sérgio Pimenta, IFC Vice President for Africa noted that, “A strong private sector is an essential driver for sustainable growth, job creation, market competitiveness and shared prosperity.
“IFC’s investment in Metier Capital’s Growth Fund III will increase access to much-needed private capital that will catalyze value creation for these companies and help bolster Africa’s private equity industry.”
IFC’s investment, in the statement announcing the deal, said it aligned with its strategy to strengthen the African private equity market. It also demonstrates that investing in African markets can generate commercial returns for investors as well as positive developmental impact for the continent.
