The Board of the African Development Bank has approved a€12.5 million equity investment in Adiwale Fund 1, a first-generation private equity fund targeting high growth potential Small and Medium Sized Enterprises ( SMEs) in Francophone West Africa.
With a target fund size of €75 million, the Fund will take minority stakes in SMEs that are well established in their markets, have competitive advantage and can rapidly scale up.
The geographical focus of the Fund will be on a handful of countries where economic prospects, and the Fund’s networks, result in opportunities. Average deal size for the Fund will range from €3 to €8 million. Primary target countries will include Cote d’Ivoire, Senegal, Burkina Faso and Mali while secondary target countries will include Togo, Benin and Guinea. These countries are currently underserved by the global private equity (PE) market.
Across these economies, the Fund will target three key sectors: consumers (comprising consumer goods and services, education and health); business services (transport, logistics, IT, internet services, construction-related services) and manufacturing (pharmaceuticals, agri-processing, chemicals, etc.).
“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.
Established in 2016, the Fund Manager, Adiwale Partners, houses 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.
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.
From a development perspective, the Bank investment will provide growth capital to African SMEs, resulting in spill-over effects on job creation (direct & indirect, skilled & unskilled, men & women) and tax revenues. It will support local entrepreneurs with access to business management expertise and promote regional integration via the Fund’s support for companies looking to expand regionally. It will also boost best-in class corporate governance and human capital development, which ultimately unlocks top line growth and supports economic transformation.
The Fund’s investment strategy 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”. It 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.