Norfund’s USD 7.5 M Investment Expands Inside Equity Fund II to Strengthen SME Growth

Inside Capital Partners has secured a major boost for its second fund, Inside Equity Fund II (IEF II), with Norwegian Investment Fund (Norfund) joining as a Limited Partner.

The additional USD 7.5 M investment from Norfund brings the fund’s total size to USD 62 M, reinforcing efforts to support small and medium-sized enterprises (SMEs) across Southeast Africa.

The partnership reflects a growing commitment to fueling businesses that drive economic transformation in the region. SMEs in Africa’s emerging markets often face a difficult financial landscape, with limited access to capital preventing them from reaching their full potential.

IEF II was designed to address this challenge, offering equity investments to businesses that show strong potential for both growth and positive impact. The fund targets sectors that align with sustainable development goals, such as clean energy, waste reduction, and gender-inclusive enterprises.

The investment comes as Inside Capital Partners builds on the momentum of IEF II’s first close, which secured USD 55 M from a mix of returning and new investors. Dutch Good Growth Fund (DGGF) and Terra Mauricia Ltd reaffirmed their commitment, while new backers include the U.S. International Development Finance Corporation (DFC), the International Finance Corporation (IFC) from the World Bank Group, Swedfund International, Mauritius Investment Corporation (MIC) Ltd, and BIO, the Belgian Investment Company for Developing Countries.

With a 10-year investment horizon, IEF II aims to support 12 high-impact businesses across Madagascar, Zambia, and Mauritius, with potential expansion into Mozambique and Tanzania.

It follows the success of Inside Capital’s first fund (IEF I), which fully deployed USD 35 M into six companies across industries such as waste recycling, renewable energy, packaging, building materials, and hospitality. IEF II aims to continue this strategy, targeting businesses that not only demonstrate strong growth potential but also contribute to sustainable development.

Jérôme Lagesse, Managing Partner at Inside Capital Partners, emphasized the significance of this investment, describing it as a critical step toward creating lasting change. “At Inside, we see investment as more than just capital—it’s a catalyst for transformation. By welcoming Norfund as a partner, we are reinforcing our commitment to high-impact SMEs, unlocking economic opportunities, and driving sustainable development where it’s needed most.”

Beyond financial returns, IEF II integrates a strong Environmental, Social, and Governance (ESG) framework into its investment process. The fund follows ESG screening processes aligned with EDFI standards and applies IFC Performance Standards to conduct environmental and social due diligence on potential investees. This ensures that each investment aligns with sustainable development goals and contributes to positive social and environmental outcomes.

As the fund continues to grow, so does its ambition to reshape Africa’s investment landscape. Norfund’s involvement strengthens IEF II’s ability to back businesses that are driving real economic change, providing long-term financial support to the companies that will shape Southeast Africa’s future.