Washington D.C.-based private equity group, Emerging Capital Partners (ECP), recently made an investment of USD 15 million to South African microfinance institution (MFI) Blue Financial Services Ltd. (BFS). Through shares and convertible bonds, ECP will finance the investment through its Africa Fund II to help BFS expand as well as assist BFS in generating working capital.
ECP is a private equity firm that began investing in Africa in 2000. Throughout its five African offices, ECP targets businesses in areas without heavy competition or in sectors where Africa has either a comparative advantage or an unmet need. ECP has six separate private equity funds, with a total size calculated to be USD 1.3 billion.
ECP Africa Fund II PCC (Africa Fund II), the fund that will back the BFS investment, was launched in December 2005. Through equity, quasi-equity and convertible debt, the fund operates throughout Africa. Investment size ranges from USD 15 million to USD 50 million. It caters to investments in the telecoms, natural resources, financial services, power and water, agribusiness and transportation sectors. The fund also seeks companies whose values range between USD 40 million and USD 500 million.
Blue Financial Services (BFS) is an MFI based in Pretoria South Africa. Established in 2001, the MFI now works in both the public and private sector in 10 countries throughout sub-Saharan Africa. Through its 171 branches, BFS provides salary advances, home improvement finance and mortgages to “formally employed” lower-income Africans. According to BFS’s 2007 Annual Report (p 86), its total assets as of February 28, 2007, were the equivalent of USD 80.4 million. Its return on assets was 5.52 percent and its debt-equity ratio was 32.63 percent. BFS is listed on South Africa’s largest stock exchange, JSE Ltd. MicroCapital recently reported on BFS’s launch of a Nigerian microfinance bank here.
By Sarah Knapp, Research Assistant
Additional Resources:
Blue Financial Services: 2007 Annual Report, Investor Fact Sheet
Emerging Capital Partners: ECP Africa Fund II PCC, Equity Funds, Press Release, Profile
MicroCapital.org: “South African Microfinance Institution (MFI) Blue Financial Services and Nigeria’s Intercontinental Bank to Launch $25.9m Microfinance Bank” by Stephen Son
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