The African Development Bank has become the latest development finance institution to commit capital to Mediterrania Capital‘s third fund. The institution announced last week that its Board has approved a $15 million equity investment in the Africa-focused private equity manager’s third fund, Mediterrania Capital Partners III.
MCP III is looking to raise €250 million to invest in companies in North Africa as well as a select number of sub-Saharan countries including Cameroon, Côte d’Ivoire and Senegal.MCP III is a significantly larger fund than either of its two predecessors, Fons Mediterrania and MCP II, which came in at €133 million and €120 million respectively. The fund is reportedly targeting an IRR in excess of 25% from investments in companies that look set to benefit from the growth in the spending power of Africa’s rapidly urbanizing middle class. As with Mediterrania’s first two funds, typical deal sizes are expected to range from €10 million to €30 million in size.
Capital for Mediterrania’s first two funds was provided by a range of global institutions including pension funds, fund-of funds, family offices and development finance institutions. So far, both the IFC and EIB have each committed €15 million to the new fund, while, in early September, the European Bank of Reconstruction and Development announced it is currently mulling a commitment of €35 million commitment. The EBRD had previously backed Mediterannia Capital’s second fund, MCP II, which closed in August 2015.