ETHIOPIA – Cepheus Growth Capital Partners, a private equity firm focused on providing growth capital to small and medium-sized enterprises (SMEs) in Ethiopia, has revealed it is finalising the fundraising for its first US$100 million fund.
Founded in 2016 by two Ethiopian partners, Berhane Demissie and Kassahan Kebede, Cepheus is based in Addis Ababa.
The Cepheus Growth Fund I (CGCF) is the first fund raised by the fund manager, and will focus on high-growth firms in the manufacturing, consumer services, agriculture and agri-processing sectors.
In late 2017, CDC made a US$15 million commitment to the first close of CGCF, alongside the European Investment Bank, which committed US$15 million, and Norfund. The fund is the first in Ethiopia to attract a significant amount of local investment.
The fund is looking to raise a total of US$100 million and will target investments in the US$5 million to US$15 million range. Our investment will provide much-needed capital to support the growth of Ethiopia’s SMEs and the development of the country’s nascent private equity industry.
In 2015, Ethiopia was the fastest growing economy in Africa and the government has ambitious goals to transform it into a middle-income country by 2025.
With a population of almost 100 million, 60 per cent of whom are under 25, significant energy resources and low-cost labour, it has the makings of a healthy private sector.
However, many of the fast-growing SMEs in Ethiopia are family-owned businesses that lack the expansion capital to develop to their full long-term potential.
As well as providing finance, the fund manager will support these businesses in enhancing their management teams, operations and corporate governance to enable them to scale-up and compete with international counterparts. This, in turn, will support job creation – direct and indirect – and contribute to the country’s wider economic growth.
The firm recently announced an investment into East African Lion Brands Manufacturing Share Company (Lion Brands), one of Ethiopia’s leading domestic manufacturers of fast moving consumer goods (FMCG) products in the home care and food segments.
With this investment, Cepheus Capital will hold a significant minority ownership stake and provide a strategic, managerial an operational support to Lion Brands.