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CDC ups commitment to African private equity firm AFIG’s latest fund

4 Feb 2014

UK government-owned development finance institution CDC has made a $18.4m commitment to a new rights issue in West and Central African mid-market private equity fund Atlantic Coast Regional Fund (ACRF).

The commitment takes CDC’s overall commitment to the fund to $33.4m. The rights issue will provide the fund with an additional $50m of capital, enabling it to make a number of new investments in the coming years, having originally closed at $72m in 2008.

Based in Dakar, Senegal, ACRF is a generalist fund that invests primarily in a region which includes less developed markets such as Côte d’Ivoire, The Gambia, Senegal, Cameroon and the Democratic Republic of Congo (DRC). It is managed by the Advanced Finance and Investment Group (AFIG), one of the few managers outside of the mining sector with the ability and appetite to invest in many of these frontier markets, according to CDC.

In February last year AFIG was said to be back on the fundraising trail after nearing a full investment of its first vehicle.

ACRF’s target countries include those in the UEMOA (West African Economic and Monetary Union) which share French as a common language (except for Guinea-Bissau), and those in the CEMAC (Economic and Monetary Community of Central Africa). These countries have many characteristics of a single market with one currency (the West Africa CFA Franc which is pegged to the Euro), a common central bank (BCEAO), a single stock market (BVRM), and the same financial sector regulators.

ACRF targets “strong” minority positions in SMEs and mid-sized companies that are well positioned for local or regional growth. It avoids early-stage deals or later stage buyouts and has a target deal size of around $10m, generally investing through a mixture of equity and structured debt. The manager is well-differentiated from other players in the market by virtue of their strong networks and the experience of their senior team members.

Following the new rights issue, ACRF confirmed it will remain sector agnostic, but will pay particular attention to four sectors – agribusiness, financial services, light manufacturing and logistics.

Since its first close in 2008, ACRF has made investments in Chad, Rwanda, Liberia, Ghana, Senegal, Mauritania and The Gambia.  These include Ecobank, RMG Concept, Deep Drilling Company, Elton International and SenBus.

CDC investment manager Jonny Gill said, “The rights issue secured strong support from existing investors and will enable the fund to make further significant investments in the coming years. ACRF transacts in challenging countries where entrepreneurs are often less familiar with the concept of private equity and where PE funds are in short supply. The fund thus plays a critical role in increasing access to equity financing and in contributing to the development of the private equity asset class across the target region.”

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