41432 - Cepheus Fund

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Summary of Investment Information

Project Number

41432

Company Name

CEPHEUS GROWTH CAPITAL FUND LP

Date SPI Disclosed

Aug 9, 2018

Country

Ethiopia

Region

Africa

Projected Board Date

Sep 10, 2018

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 22, 2022

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Jul 17, 2017
Signed : Dec 17, 2018
Invested : Jan 22, 2019

Sector

Growth Equity Fund

Additional Project Attributes

Blended Finance

Project Description

Cepheus Growth Capital Fund LP, a Mauritius limited partnership (the “Fund”), is targeting a US$100 million fund to make investments into non-publicly traded companies or securities in Ethiopia and, in limited circumstances, greater East Africa where company operations are strategically aligned with investments in Ethiopia. These investments will be in (i) small but profitable businesses that are underserved by local capital markets and (ii) operating companies seeking growth capital to expand to meet market demand. The project will be supported by the Blended Finance Facility of the IDA18 IFC-MIGA Private Sector Window (PSW), created by the Word Bank Group to catalyze private sector investment in IDA countries, with a focus on fragile and conflict-affected states.

Associated Advisory Engagement

IFC’s advisory engagement will focus on support for pre-investment advisory and portfolio value creation, E&S and governance.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	250.0

Development Impact

IFC's additionality as an investor in the Fund is expected to (i) play a catalytic role as a DFI investor to help the Fund achieve final close and critical mass; (ii) contribute to market creation by enabling private sector development through demonstrating the viability of PE investments in a low-income IDA country that is underserved by PE funds; (iii) provide access to growth equity and business advice to companies in Ethiopia. Expected development impact includes (i) supporting the provision of sufficient capital and business advice to companies in Ethiopia to enable promising entrepreneurs and businesses have access to finance; (ii) the growth of the Fund's investee companies is expected to result in job creation and economic growth; and (iii) operational and financial improvements, implementation of best-practice corporate governance and ESG improvements of local businesses.

E&S Category Rationale / Risks and Mitigation

This project has been categorized as FI-2 in accordance with IFC's Policy on Environmental and Social (E&S) Sustainability, based on the fund’s investment strategy and pipeline. Cepheus is a generalist fund focusing on investments in Ethiopia and sub-regional opportunities in Djibouti, Kenya, Tanzania and Uganda. The fund’s primary sectors are manufacturing; agriculture and agro-processing; and services (which includes healthcare and education). The activities in these sectors are considered mostly medium risk with the potential for limited, site-specific environmental and social impacts which can be addressed through mitigation measures. The fund is not expected to invest in large-scale agriculture projects which could have significant environmental and social risks and impacts. The overall project risk is thus considered medium. The applicable requirements are the IFC Exclusion List, the National E&S Laws in the countries where portfolio companies are located and the IFC 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
Joytech Herbs	Ethiopia	A-AF - Fruits and Vegetables
East Africa Lion Brands	Ethiopia	M-EA - Miscellaneous Consumer Products (Including Sporting and Athletic Goods, Exercise Equipment, Jewelry, Musical Instruments, Toys, Games, Diversified)
JP Textile Ethiopia	Ethiopia	K-AD - Integrated Textile Operation (Spinning, Weaving/Knitting, but no Garment )
Komari Beverage	Ethiopia	F-BB - Breweries
Tabor Ceramics	Ethiopia	H-BC - Pottery, Ceramic, and Plumbing Fixtures (Including Kitchenware)
Tinaw Business	Ethiopia	A-AH - Horticultural Products (Flowers)

The main E&S risks and impacts of this project relate to the ability of Cepheus to identify and manage the potential impacts E&S risks associated with the activities of the portfolio companies in line with IFC's applicable requirements. The typical E&S issues associated with the fund's primary sectors include waste management; occupational health and safety; pollution management and management of labor standards. Cepheus has an Environmental and Social Management System (ESMS) which describes the process of identifying, assessing and managing the E&S risks and impacts associated with its portfolio companies. The Fund Manager also has an E&S Officer who is supported by other members of the team as well as external E&S consultants (where required) in the implementation of the ESMS. The Fund Manager will be required to make minor changes to the ESMS in order to meet IFC's requirements under Performance Standard 1. Sector-specific E&S risk management training is also recommended for the Cepheus team. In addition, to complement its ESMS, Cepheus will be required to develop an external communication mechanism for receiving and addressing E&S concerns raised by affected parties or members of the public about the activities of its portfolio companies. To ensure the effectiveness of the framework, IFC will review the E&S assessments conducted for the first three investments (after IFC's investment) as part of IFC's E&S monitoring process.

Task Title & Description	Actual Due Date	Status	Completion Date
Staff Training	02/01/2019	Completed	11/30/2019
Other1 Enhancement of ESMS	02/28/2023	Rescheduled
Other2 Development of an External Communication Mechanisim	02/28/2023	Rescheduled
Other3 Submission of E&S due diligence assessments for first three investments	09/30/2021	Completed	06/29/2021

Contacts

For Inquiries About the Project, Contact

Cepheus Growth Capital Partners
Berhane Demissie
Managing Partner
+251930109165
berhane.demissie@cepheuscapital.com
P.O. Box 52/1251, Bole Sub-City, Woreda 03/05, Addis Ababa, Ethiopia
http://www.cepheuscapital.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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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