Making its second investment in a permanent capital vehicle in as many months, CDC is backing Africa Capitalworks with $40 million. In early September, the UK development finance institution committed $20 million to Solon Capital Holdings, an investment holding company based in Sierra Leone.
Africa Capitalworks is a planned $300 million investment company that will target mid-market opportunities in a number of sectors across sub-Saharan Africa outside South Africa. The vehicle was set up in September by Capitalworks, one of Africa’s larger private equity firms and will be directed by Beth Mandel and Nana Sao. By employing a permanent capital structure rather than a traditional fund structure for the new investment vehicle, the firm’s sponsors hope that offering longer-term capital solutions will both better serve the mid-market companies in the continent’s rapidly growing and developing sub-Saharan economies as well as maximize returns.
“Many mid-sized African businesses struggle to raise the long-term capital they need to grow into the type of national and regional champions that bring growth and jobs,” commented Nurray Grant who heads CDC’s intermediate equity investments. “We’re backing Africa Capitalworks because they’ve shown that they can grow businesses over the long term and do it in a way that’s different to traditional private equity. We believe the longer holding period will enable businesses to grow and create jobs through multiple phases of value creation.”
In its bid to raise the $300 million it has targeted, Africa Capitalworks has already received significant support and investment from, among others, Public Investment Corporation, South Africa’s largest asset manager and manager of the Government Employees Pension Fund. As well as capital, Africa Capitalworks will help its investments build value and expand by playing active board roles, taking a key role in significant decisions and helping access markets, finance and technology and building business networks.