The African Development Bank (AfDB) has given the green light for a €12.5 Mn (USD 14,055,837) equity funding via Investment in Francophone West Africa, in a bid to reach out to and bolster SMEs in the region. The investment is part of the bank’s Adiwale Fund 1, a private equity fund with targets on the high-growth SMEs in French-speaking West Africa.
The fund whose size is €75 million (USD 84,328,125) in the long run, will take minority stakes in SMEs with provable presence in their markets, have a competitive advantage and has the ability to scale up rapidly. The investment comes on the backs of the growing startup and SME activity in the region, which is not in the reception of the same financial attention given to Anglophone West Africa.
Countries benefiting from this AfDB investment, which is aligned with the Bank’s High 5 goals of “Industrialize Africa, Integrating Africa and Improving the Quality of Life for the People of Africa”, include Senegal, Burkina Faso, Mali, Togo, Benin Republic, Ivory Coast and Guinea, all of which are believed to be currently underserved by the global private equity (PE) market. The Fund’s geographical concentration will be in countries where economic prospects and the investment’s network will culminate in opportunities, with primary and secondary nation focus as the bank sees fit.
Across these Francophone West African economies, the average deal size will range from €3 Mn (USD 3,373,080) to €8 Mn (USD 8,995,328), targeting three key sectors including consumers, business services and manufacturing. The sub-focus would include logistics, IT, pharmaceuticals, agri-processing, consumer goods, and services as well as transport.
“The Bank’s investment in Adiwale Fund 1 would enhance the availability of financing and capacity support for SMEs in Francophone West Africa,” said Alhassane Haidara, Divisional Manager of Non-Sovereign Industries and Services at the African Development Bank, per an issued statement.
The manager of the Fund is Adiwale Partners, a 2016-established group which umbrellas 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.
A statement informs that with support from the Bank, the team is expected to drive value creation in investee companies through improvements in internal functions and implementation of best-governance practices.
The Fund is in line with the Bank’s Ten-Year Strategy (2013-2022) objectives of promoting inclusive economic growth and productivity gains. It is further aligned with the Regional Integration Strategy Paper for West Africa that aims to foster regional integration by investing in companies which will grow to become regional economic players.