I&P Développement 2 (IPDEV 2); an investment company managed by Investisseurs & Partenaires who are known to be experienced fund managers with a primary focus on SMEs in Africa, have announced the closure of an investment round which saw it exceed its initial targets by raking in investment capacity to the tune of USD 24.4 Mn.
Long-term committed investors such as the African Development Bank (AfDB) and Soros Economic Development Fund are known to have weighed in on the current investment machinery which puts IPDEV 2 in a better stead to achieve its broader vision of training, sponsoring, and launching ten impact funds in Sub-Saharan Africa — five of which are believed to have already been launched in such African countries as Senegal, Côte d’Ivoire, Burkina Faso, Niger, and Madagascar.
Ceniarth, BNP Paribas, the Adolf H. Lundin Charitable Foundation, and FISEA (the Proparco-managed Investment and Support Fund for Businesses in Africa), are also amongst other players in this final closing.
The latest development appears to be taking a cue from a first closing which brought in USD 11 Mn in investment funds at its conclusion in October 2015. With the most recent development, IPDEV 2 has now added on USD 13.4 Mn, and this final closing brings its equity up to USD 24.4 Mn.
Stefan Nalletamby, Director of Financial Sector Development at the AfDB, speaking with regard to the development, gave the indication that IPDEV 2 can be considered as one of the first impact investing projects of this nature to garner support from the AfDB. He also offered that in addition to making capital readily available and accessible to small and early-stage enterprises in Africa, the focus of IPDEV 2 on building the capacity of African investment teams is something that sits well with the AfDB. He opined that IPDEV 2 would do a good job of significantly extending the reach of impact investing in Sub-Saharan Africa.
According to Manuel Costescu from Soros Economic Development Fund, the pedigree of IPDEV 2 which is evident in its role in catalyzing the growth of early-stage entrepreneurship in Africa through the mentorship of local investment teams, is a testament to the ability of the investment company to deliver. He finds the strategy of IPDEV 2 which is centered around these local investment teams as a good move since they are deeply immersed in their respective communities and can make the best judgments with regards to resource allocation to SMEs that may be otherwise neglected by the formal financial system. “These SMEs increase economic opportunities for the vulnerable populations we seek to reach,” he remarked.
IPDEV 2 is also believed to have raised a separate USD 17.4 Mn in investments besides the already-mentioned USD 24.4 Mn. This additional investment is said to have been raised from a group of African co-investors who are known to invest in African funds. The company also claims to have incorporated a finance program which has around USD 22 Mn in grants earmarked for the development of a Technical Assistance Facility for SMEs, as well as seed funding for startups and SMEs.
Having already launched five African impact funds since coming into existence in 2015, in the form of Senegal’s Teranga Capital, Côte d’Ivoire’s Comoé Capital, Burkina Faso’s Sinergi Burkina, Niger’s Sinergi Niger, as well as Miarakap in Madagascar, (who are said to have collectively had a hand in the equity and seed financing of up to 27 early-stage SMEs and also raised around USD 17.4 Mn in both local and international capital), IPDEV 2 has now set its sights on sponsoring another five impact funds in the West, Central, and East Africa in the coming years.
As part of the perks that come with its partnerships, IPDEV 2 seeks to provide partner impact fund managers with capital, tools, coaching, as well as an expansive network that is believed to bring together a community of African and international mentors, entrepreneurs, and investors. The next five impact funds that are planned for Sub-Saharan Africa are expected to spearheaded and managed by committed and talented first-time investment teams whose selection will be the prerogative of IPDEV 2.
The vision of the investment company is believed to be focused on financing promising African early-stage businesses and startups. In spite of their obvious potential, the growth of a number of African enterprises is known to be hampered by the inability to access finance as the formal financial sector somewhat neglects them. With a view to solving this problem, IPDEV 2 is looking to eliminate the bottlenecks associated with funding for African early-stage enterprises by pumping between USD 23 K and USD 582 K into 500 early-stage SMEs in ten African countries within the next few years.
Commenting on the development, Jean-Michel Severino, CEO of Investisseurs & Partenaires, reiterated that I&P is hoping to expand the reach of impact investing into early-stage entrepreneurs on the continent through IPDEV 2. He also enthused that the company has a vital role to play in linking up the ecosystem of African investors to some of the most promising SMEs with equity investments that can be thought to be of the same order as the highest professional standards.
By virtue of its innovative mechanisms, IPDEV 2 hopes to continue in its contributions which can be considered to be geared towards promoting the emergence of a new breed of African entrepreneurs, while also helping to build a community of investment professionals throughout the continent.