8 Miles, the Africa-focused private equity firm chaired by activist and Boomtown Rats frontman Bob Geldof, is poised to make its first investment.
The London-based firm is expected to join an investment round within the next month for eleni, a newly-formed company based in Nairobi, Kenya which will incubate and support commodity exchanges across Africa to promote food security.
8 Miles is expected to receive support for the deal from the African Development Bank.
The financing round is being led by Morgan Stanley – which has invested in a number of exchanges and market centres globally – and International Finance Corp, which have both agreed to make equity investments of $5m and $2.5m respectively.
Eleni is led by CEO Eleni Gabre-Madhin, who founded and managed the highly acclaimed Ethiopia Commodity Exchange (ECX) from 2008 to late 2012.
Building on the success of ECX, Gabre-Madhin and co-founders Keith Thomas and Jawad Ali have recently launched eleni, which aims to be the industry leader in designing, building, and supporting the operations of commodity exchange eco-systems in frontier markets.
The company’s business model is based on delivering turnkey projects on a Public-Private Partnership basis, combining private investment with the best of know-how, technology and management, to support exchange projects.
The company, which expects to launch several such projects in 2013, aims to rollout exchanges progressively across Africa and elsewhere in the coming years.
Beyond the initial funding, each country or regional exchange project will involve the formation of a private investor consortium.
“I cannot think of a better time to develop this business in Africa,” Gabre-Madhin said in a statement. “Africa is the world’s last frontier for agriculture, with only one quarter of its yield potential achieved and seventy per cent of its farmland as yet unused.
“Our company represents passion, excellence, integrity and innovation. Our aim is to build vibrant exchanges across frontier economies, going beyond Africa and beyond agriculture, to transform not only commodity markets but also the livelihoods of millions of producers.”
The fund, which is looking to raise about $450m, aims to invest across industries including agribusiness, consumer and retail, health, telecoms and business and financial services.
Cornerstone investors include the IFC, African Development Bank, and UK government-owned development-finance institution CDC, alongside other institutional and private investors.
The firm is supported by senior advisers, including industrialists, governance and industry experts, with Geldof taking the role of non-executive chairman.
“Africa is now a continent of extraordinary business and investment opportunity,” Geldof said at the time. “Private equity is one way to support the enterprise and dynamism of the people of the continent and help provide the jobs and skills that are needed.”
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