AfriCap Microfinance Fund, established in 2001 as the first African private equity fund dedicated to the microfinance industry, has closed a second round of investment, raising its capital from USD 14 million (Sh 910 million) to USD 50 million (Sh 3.25 billion). The Mauritius-based firm also announced that it has transformed into a private equity investment company and changed its name to AfriCap Microfinance Investment Company.
Over the past six years, AfriCap has invested in 13 microfinance institutions (MFIs) across Africa, including USD 1 million in loans and debt securities to PRIDE Uganda and a USD 1.59 million equity stake in Equity Bank in Kenya. The two exits generated by AfriCap since its founding averaged a return (IRR) of over 30 percent. AfriCap also participated in the listing of Equity Bank, the first initial public offering (IPO) of an African MFI.
Recapitalization received strong support from investors, particularly from initial shareholders including Calmeadow, a Canadian non-profit organization, AfriCap Sweden, a private-sector consortium founded for the purpose of investing in AfriCap, ACCIÓN International, a leading non-profit microfinance organization, the European Investment Bank (EIB), the European Union’s non-profit, policy-guided financial institution, and the Netherlands Development Finance Company (FMO), a development bank established by the Dutch government to invest in private sector projects in emerging markets. Existing shareholders provided approximately 35 percent of AfriCap’s new capital.
Some early investors in the fund opted to exit through sale of their shares. The exit generated a 14 percent return for these early investors, including Société Belge Pour Le Développement International, the DOEN Foundation, CORDAID and the Argridius Foundation.
The transaction also attracted additional development organizations including FinFund, NorFund and SwedFund, as well as significant private investors such as Nordic MicroCap, BlueOrchard Private Equity and the Gray Ghost Fund.
BlueOrchard is a group of Swiss companies specializing in the management of microfinance investment products. As of February 2007, BlueOrchard had investments in 68 MFIs in 24 countries around the world and USD 162 million in total assets. Gray Ghost Fund is a privately-owned fund of funds which focuses exclusively on investing in microfinance funds that supply capital to MFIs. Its total assets are valued at USD 75 million. As of September 2006, its investments totaled USD 44.3 million.
Additional Resources:
AllAfrica.com: “Kenya: Africap Raises Capital to Sh3 Billion”
Africa-investor.com: AfriCap Press Release: “AfriCap closes a $50 million round and creates the largest African microfinance private equity company”
Microfinance Information eXchange (MIX): AfriCap (AfriCap Microfinance Fund): Investments
MIX: PRIDE- UGA (PRIDE Uganda)
MIX: Dexia Microcredit Fund (Dexia Microcredit Fund): BlueOrchard Finance Newsletter: February 2007
MicroCapital.org article, August 9, 2006: “Exceeding Expectations for Microfinance Investment: Share Price Soars in Equity Bank’s First Official Listing at Nairobi Stock Exchange”
Netherlands Development Finance Company (FMO)
Gray Ghost: About Us
Gray Ghost: Gray Ghost Fund Portfolio
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[…] in microfinance programs. Recently, the firm reinvested in African microfinance private equity fund AfriCap. The firm has also made investments in Indian microfinance funds such as Bellwether, a fund based […]