WEST AFRICA – The African Development Bank signed off on its US$13.86m equity investment in Adiwale Fund 1, a first-generation private equity fund targeting high growth potential Small and Medium Sized Enterprises (SMEs) in francophone West Africa.
The Bank Group’s board of directors approved the investment in March as part of its commitment to grow SMEs and improve livelihoods in countries underserved by the global equity market.
With a target fund size of €75 million, the Fund will take minority stakes in vibrant SMEs in countries where economic prospects and the Fund’s networks permit a rapid scale up.
Deal size for the Fund will range from €3 to €8 million. Primary target countries will include Cote d’Ivoire, Senegal, Burkina Faso and Mali, while secondary beneficiaries will include Togo, Benin and Guinea.
The Fund will target three sectors across these economies, some of which are fragile states: consumer goods and services, including education and health; business services such as transport, logistics, information technology and construction, and manufacturing, including pharmaceuticals, agri-processing and chemicals.
Abdu Mukhtar, Director for Industrial and Trade Development said the Fund’s investment strategy is aligned with the Bank’s High 5 goals especially ‘Industrialize Africa, Integrate Africa and Improving the Quality of Life for the People of Africa’.
“The most exciting part is that the Fund focuses on SMEs in francophone West Africa which accounts for nearly 19% of West Africa’s GDP but attracts only 7% of private equity capital.” Mukhtar remarked
“As these companies grow, they cross the borders and integrate across different countries.”
Established in 2016, the Fund Manager, Adiwale Partners, houses a team of experienced West African nationals with several decades of combined private equity, operational, development finance and asset management experience in Africa, Europe and the United States.
From a development perspective, the Bank’s equity investment will provide growth capital to African SMEs, resulting in spill-over effects on job creation and tax revenues, with about 45% of the jobs going to women, Mukhtar said.
Savi de Tové said the Fund will also provide local entrepreneurs with management expertise and boost best-in class corporate governance and human capital development, which ultimately unlocks growth and supports economic transformation.