African Development Bank approves a €12.5 million investment in Adiwale Fund I

African Development Bank Group, Thu. 28 March 2019

The Board of Directors of the African Development Bank has approved a €12.5 million equity investment in the first generation private equity fund Adiwale Fund 1, which targets high-growth small and medium-sized enterprises (SMEs) in Francophone West Africa.

With a target capitalisation of EUR 75 million, the fund will acquire minority stakes in SMEs that are well established in their market, have a competitive advantage and can grow rapidly.

Geographically, the fund will focus on a handful of countries where the economic outlook and its own networks offer opportunities. The average transaction size of the fund will be between €3 and €8 million. Côte d'Ivoire, Senegal, Burkina Faso and Mali are the first countries targeted, followed by Togo, Benin and Guinea. All are currently underserved by the global private equity market.

The Adiwale 1 fund will focus on three main sectors: consumer services (consumer goods and services, education and health, etc.), business services (transport services, logistics, IT, internet and construction) and the industrial sector (pharmaceuticals, agribusiness, chemicals, etc.).

"The Bank's investment in Adiwale Fund 1 will improve financing opportunities and capacity building support for SMEs in Francophone West Africa," said Alhassane Haidara, Head of the Non-Sovereign Industries and Services Division at the African Development Bank.

Launched in 2016, the fund's management company, Adiwale Partners, draws on a team of seasoned West African professionals who between them have decades of combined experience in private equity, operations, development finance and asset management in Africa, Europe and the United States.

With the Bank's investment, this team is expected to help investee companies create more value by improving their internal functions and applying best practices in governance.

On the development side, the Bank's investment will finance the growth of African SMEs, resulting in job creation (direct and indirect, skilled and unskilled, for men and women) and tax revenues. It will also benefit local entrepreneurs who will benefit from business management expertise, while promoting regional integration as the fund will support companies seeking to expand regionally. Finally, the equity investment will promote best practices in corporate governance and human capital development. This will help drive business growth and economic transformation.

The fund's investment strategy reflects three of the Bank's High 5 priorities - Industrialising Africa; Integrating Africa; and Improving the quality of life of people in Africa. It also responds to the objectives of inclusive economic growth and productivity enhancement in the Bank's Ten-Year Strategy 2013-2022.

Finally, it is in line with the Regional Integration Strategy Paper for West Africa, which foresees strengthening regional integration by investing in companies that will become regional economic players.