German fund of funds AfricaGrow provides equity capital for SMEs and start-ups

AFRICA – Allianz Global Investors, a global investment management firm, has teamed up with the KfW Development Bank, a German government-owned development bank, to launch a fund of funds designed to provide financial resources for African private equity and venture capital funds.

The new venture, which is known as AfricaGrow, is designed to fund 150 small- and medium-sized enterprises and start-ups in reform-orientated African countries through local funds by 2030. More than 25,000 new jobs will be created.

The project, which has the backing of Germany’s Federal Ministry for Economic Cooperation (BMZ) and Development, is designed to promote sustainable economics and social development.

Allianz Global Investors will act as lead manager on the Germany-based fund, which will aim to provide 25,000 new jobs by 2030. The lead manager on the strategy is Martin Ewald, who is lead portfolio manager for impact investments.

The fund has launched with an initial US$183 million in assets, with US$94 million from BMZ, US$33 million from a subsidiary of KfW and between US$66.8 million and US$77.42 million from Allianz. The German Federal Government is also providing capital for support measures.

Commenting on the launch, Andreas Utermann, CEO of Allianz Global Investors, said: ‘Allianz Global Investors is committed to promoting impact investments by mobilising equity capital. AfricaGrow is an innovative solution that enables us to have a positive impact on Africa’s social infrastructure on a large scale in the long run.’a

“The design and structure of the new AfricaGrow Fund is a milestone in support for the African economy. It is intended to help small and medium-sized enterprises, primarily in reform-oriented African countries, close the existing financing gap and build a solid equity base.” said Prof. Dr Joachim Nagel, Member of KfW Group’s Executive Board.

“In Africa’s economy it is mainly the small, local companies that create the most jobs and thus contribute significantly to securing people’s incomes.” 

When the fund was designed, great importance was attached to ensuring that the investments had clear sustainability objectives. 

Through regular and careful monitoring, the aim is to have a measurable positive social and/or economic impact in the form of, for instance, income security and the creation of decent jobs in the areas of education, energy and financial services, for example.

For the Allianz Group, the project is an important and innovative component of its Africa strategy. Investments on the African continent are broadly diversified across countries and sectors

As a legally independent entity, AfricaGrow is a central instrument of the Compact with Africa (CwA) initiative, which was launched in 2017 under the German G20 presidency.

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