34951 - NEOMA AFRICA FUND III (M), LP

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Summary of Investment Information

Project Number

34951

Company Name

NEOMA AFRICA FUND III (M), LP

Date SPI Disclosed

Jul 17, 2014

Country

Africa Region

Region

Africa

Projected Board Date

Sep 5, 2014

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Feb 21, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Sep 5, 2014
Signed : Dec 12, 2014
Invested : Jun 12, 2015

Sector

Growth Equity Fund

Project Description

The proposed project entails an IFC equity investment of up to US$50.0 million, not to exceed 20% of total commitments, in Abraaj Africa III, LP (“AAF III” or “the Fund”), a 10 year closed-end fund seeking to raise US$800.0 million. The key objective of AAF III is to construct a portfolio of investments diversified by sector, country and deal type, which collectively capture the attractive mid-market growth opportunity in Sub-Saharan Africa. The Fund’s investment strategy is to focus on well-managed mid-size companies with established business models that are poised for national or regional expansion. The Fund will seek to partner with companies that have the capability to create value through a combination of organic expansion, acquisitions, strategic repositioning and consolidation strategies, thus enabling such companies to become regional champions. The Abraaj Group’s network of offices and experience with executing regional growth strategies provides it with the platform to execute these strategies.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	50.0

Development Impact

Abraaj Africa Fund III is expected to deliver strong development impact in the following areas: (i) Job Creation: The growth of the Fund's portfolio companies is expected to result in strong job creation. Mid-cap growth equity investments, which the Fund is focusing on, have significant reach to SMEs, the largest development impact on job creation, and the potential for IFC to develop direct relationships with the underlying companies. IFC's portfolio experience has been that non-SME's in the growth equity space create more jobs than SMEs at a lower capital commitment per job created. (ii) IDA countries: The Fund will predominantly cover companies located in IDA/frontier countries. Most of the investee companies in the Aureos family of funds were in IDA countries. (iii) Private sector development: The Fund will employ hands-on management in its portfolio companies. The Fund Mananger's structuring know-how, and the wider Abraaj network, will be leveraged on, and value-add and growth strategies incorporated by investee companies, leading to improved competitiveness and sustainability.

IFC is expected to play a role in: (i) Catalyzing funding from local and international commercial investors. If prominent investors in earlier funds back the Fund in the first closing, it will provide greater credibility to the Fund Manager. IFC is an important investor in three prior Aureos funds in Africa, and its continued support will send a positive signal to commercial investors. (ii) IFC's Environment, Social and Governance (ESG) standards have developed since IFC's investment in Aureos Africa Fund in 2008, and through participation in the Fund IFC will have influence on the Fund to review the adoption of IFC's Performance Standards. Through IFC's particpation in first close, IFC will confirm the Fund Manager has upgraded its ESMS to comply with the new Standards. (iii) IFC will play an important role in co-investing with the Fund, where required, by providing additional debt and equity funding to the investee companies.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Emerging Fund Managers (Y/N)	Yes/No		Not Available	Not Available	Not Available
Employment: New Jobs in Fund Investees (#)	individuals		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The project has been categorised as FI-2 according to IFC’s Environmental and Social Review Procedures. The fund is expected to focus on mostly medium risk sectors such as consumer products, logistics, industrial and infrastructure services considered to have limited E&S risks and impacts which can be readily addressed through mitigation measures. The fund will also invest in financial institutions such as micro and SME banks and insurance companies. The applicable requirements are the Exclusion List, the National E&S Laws in the countries where portfolio companies are located and the Performance Standards.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Ghana Home Loans	Ghana	O-FA - Other Non-Banking Financial Institution (NBFI)
Indorama	Nigeria	M-DB - Industrial Machinery
Java House	Kenya	M-EA - Miscellaneous Consumer Products (Including Sporting and Athletic Goods, Exercise Equipment, Jewelry, Musical Instruments, Toys, Games, Diversified)
Joint Medical Holdings	South Africa	S-AA - Hospitals and Clinics
Libstar Holdings Pty Limited	South Africa	M-DA - Agriculture, Construction, and Mining Machinery
Mouka	Nigeria	M-EA - Miscellaneous Consumer Products (Including Sporting and Athletic Goods, Exercise Equipment, Jewelry, Musical Instruments, Toys, Games, Diversified)
Octotel	South Africa	P-GE - Infrastructure Fund

The main E&S risks and impacts of this project relate to the ability of the Fund Manager to conduct adequate E&S due diligence and monitoring to identify and manage the E&S risks associated with the activities of the portfolio companies in line with IFC’s policy requirements. The Fund Manager has an Environmental and Social Management System (ESMS) and an E&S Officer, and adequate E&S due diligence and monitoring assessments are conducted for portfolio companies. The Fund Manager’s E&S performance is considered satisfactory. However, the Fund Manager needs to improve on its E&S risk management approach for financial intermediaries toensure that each financial intermediary develops an adequate E&S risk management system for managing the E&S risks and impacts associated with its lending portfolio in line with IFC’s policy requirements for financial intermediaries. The existing E&S team will be retained for AAF III and the existing E&S risk management system will also be applied to AAF III transactions. In addition, the Fund Manager will be required to provide E&S risk management training to any new members of the team.


Task Title & Description	Anticipated Completion Date as Disclosed in SII
Nominate officers
Establish SEMS
Staff Training
Other

Contacts

For Inquiries About the Project, Contact

Ijeoma D. Agboti
mailto:Ijeoma.agboti@abraaj.comThe Abraaj Group+234 817 310 6991 (Lagos)+971 562 165 776 (Dubai)mailto:ijeoma.agboti@abraaj.com

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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