Towards the end of 2012 CDC committed US$30m to the Investec Africa Credit Opportunities Fund I, sub-Saharan Africa’s first corporate debt fund, which is run by Investec Asset Management. The commitment was the first made by CDC’s debt and financial institutions team.
Debt investments, which are made directly to companies and financial institutions as well as through funds, represent an additional medium through which CDC provides capital. CDC has long adopted a flexible approach towards investing and providing debt and direct equity, under the terms of CDC's strategy for 2012 onwards, will enable us to meet a greater range of capital needs and target investment towards opportunities with the greatest potential for job creation.
The Investec Fund, which is also supported by Dutch development bank FMO, will provide long-term capital to businesses of different sizes and sectors across a wide range of countries in sub-Saharan Africa (excluding South Africa). The team is aiming to raise up to US$350m for the fund from a range of commercial investors both in Africa and beyond. CDC played a key role in anchoring the fund and helping the team put the right terms and systems in place.
Addressing a LACK OF FINANCE
There is a shortage of credit in sub-Saharan Africa for private sector businesses. In 2013, the IFC ranked each country in the world according to the ease with which businesses can access credit. In this analysis, carried out for the 2013 Doing Business Report, sub-Saharan Africa accounts for 25 of the lowest 50 ranked countries.
CDC has worked closely with Investec to ensure that the fund will bring in other institutional investors and that their money will be used to provide debt capital to companies that need it across sub-Saharan Africa, avoiding the common focus on the more developed economies in the region like South Africa.
The Investec Fund will typically provide capital to businesses and projects which already support local employment, enabling access to longer term funding to companies than is typically available in the market. The finance may be used as working capital or to fund expansion, both of which can result in job creation over time.
||Investec Africa Credit Opportunities Fund 1
||Investec Asset Management
|CDC Commitment to Fund
|Date of Commitment