48370 - SMEV ARF IV

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Summary of Investment Information

Project Number

48370

Company Name

AFRICAN RIVERS FUND IV LP

Date SPI Disclosed

Nov 22, 2023

Country

Africa Region

Region

Africa

Projected Board Date

Dec 22, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 11, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Jul 17, 2017
Signed : Mar 8, 2024
Invested : Apr 9, 2024

Sector

Growth Equity Fund

Additional Project Attributes

Blended Finance

Project Description

African Rivers Fund IV (“ARF IV” or the “Fund”), a Mauritius limited partnership, is targeting US$135 million to construct a portfolio of investments diversified across Central, Eastern, and Southern Africa, which collectively capture the underserved small and medium-sized enterprises (“SMEs”) and fragile and conflict-affected states (“FCS”) investment segment in those regions. ARF IV’s investment objective is to provide long-term financing to SMEs through self-liquidating instruments, including straight debt, debt with revenue-sharing, and debt with equity. The Fund will be supported by the Blended Finance Facility (“BFF”) of the IDA19 IFC-MIGA Private Sector Window (“IDA-PSW”), created by the Word Bank Group to catalyze private sector investment in IDA countries, with a focus on FCS.

Associated Advisory Engagement

IFC’s advisory engagement will support XSML across several areas, including fund management (including E&S, gender, governance) and SME value creation and exit preparedness.

Sponsor / Cost / Location

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

Development Impact

The main project impact of the fund is through increased access to growth capital and value creation for SMEs. ARF IV will provide access to equity and mezzanine debt capital to 40-50 SME companies located in Sub Sharan Africa. The Fund will support value creation for its investees by providing them with organizational and operational support through its own TA facility and help them expand regionally. The Fund is expected to invest at least 80 of its capital in IDA Countries, and Fund’s investees are expected to be SMEs contributing to the SME Venture Program’s objectives for IDA- and SME-focused investments. Beyond the project, it is expected to support the creation and development of a nascent PE market by increasing market competitiveness. The PE ecosystem in Central and Eastern Africa is nascent, except for a few countries, such as Kenya. The Fund is focusing on the frontier markets in the region with negligible fundraising and investment activity. In this context, IFC’s investment and advisory to an existing player with a well-established track record and demonstrated ability to scale up are expected to signal the viability of investments in these markets, inducing other funds to enter or increase investments in the target region. Moreover, it is also expected to attract new investors to the market and help deepen the market.

IFC’s additionality is both financial and non-financial. Financial additionality comes from IFC’s support of USD 15 million of its own account equity, which will help the Fund achieve its target size of USD 135 million. In addition to this, IFC proposes providing IDA-PSW BFF funding to commercial investors, which will help mobilize resources for the fund manager. Non-financial additionality comes from non-commercial risk mitigation through IFC’s participation in the first close, along with other DFIs, which will help signal confidence in the fund manager and provide comfort to other potential investors, including other DFIs and commercial investors. The Fund Manager will also be supported by IFC’s advisory services, which include GP capacity building and pre-investment pipeline support, which will be especially useful as the fund expands into Zambia.

E&S Category Rationale / Risks and Mitigation

ARF IV targets investments in small and medium-sized enterprises (SMEs) in Central, East, and Southern Africa in sectors such as food and beverage, agrobusiness, healthcare, pharmaceuticals, retail, manufacturing, hospitality, ICT, logistics and transport, which entail limited adverse E&S risk and impacts that are few in number, generally site-specific, largely reversible and readily addressed though mitigation measures. The overall portfolio risk is thus considered medium, therefore the Project has been categorized as FI-2 in accordance with IFC’s Sustainability Policy. 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. These risks are typically associated with labor and working conditions, occupational health and safety, pollution prevention and atmospheric emissions, or waste and wastewater management, amongst others. The Fund Manager, XSML, is an existing client through other Funds and performs in line with IFC’s requirements for financial intermediaries. An assessment of labor practices in relation to IFC Performance Standard 2 revealed that XSML meets the respective IFC requirements. For this Project, XSML will be required to enhance the ESMS, train staff on E&S, provide the first three E&S due diligence reports to IFC for review, and report annually to IFC. XSML will also be required to continue meeting labor and working conditions in line with IFC Performance Standard 2. The Project will not be used to support higher-risk transactions that may include: (a) involuntary resettlement; (b) potential adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, investments involving coal mining, coal-related activities and upstream oil and gas activities will be excluded from the Fund’s portfolio. The applicable requirements for sub-projects will be the IFC Exclusion List, the national E&S laws and regulations of those countries in which investments 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
BRICOKIN	Congo, Democratic Republic of	Q-BZ- Other Retail
Dreampack	Uganda	L-AC- Other Plastic and Rubber Products
General Market of Africa Sarl	Congo, Democratic Republic of	Q-BA- Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
GoPhones Ltd	Zambia	N-AC- Mobile Telephony
GSK General Enterprises LTD	Uganda	F-AB- Sugar Refining and Sweetener Production
Gulkis	Angola	F-AI- Other Food
Hyperpsaro SARL	Congo, Democratic Republic of	F-AI- Other Food
Immobiliere Petit Pont _ IPP	Congo, Democratic Republic of	D-AA- Construction and Real Estate
Infoset SARL	Congo, Democratic Republic of	R-AC- Other Services (Including IT Enabled Services)
Inn Kin Sarl	Congo, Democratic Republic of	U-AE- Other (Including Restaurants, Amusement Parks, etc.)
Intermarcas	Angola	A-AJ- Other (Agriculture and Forestry)
Kayser Congo SARL	Congo, Democratic Republic of	Q-BA- Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
Latitude 15	Zambia	U-AA- City and Business Hotel
Mass projects	Uganda	M-HB- Solar Photovoltaic Equipment
PGT	Congo, Democratic Republic of	Q-AB- Pharmaceuticals and Medicine Wholesalers
Premier World	Uganda	U-AC- Travel Agency
Prime Concepts	Uganda	J-AG- Paper Packaging Products (Including Boxes, Cartons, etc.)
Ranchers Finest	Uganda	F-AJ- Packaged Food
Rovis Investment Ltd	Congo, Democratic Republic of	E-BA- Oil and Gas Transport or Pipeline
Shalina	Zambia	G-FA- Pharmaceuticals and Medicine Manufacturing
Shelton Hotel	Congo, Democratic Republic of	U-AA- City and Business Hotel
SoGood	Congo, Democratic Republic of	Q-BA- Grocery Retail (Supermarkets, Hypermarkets, Convenience Stores etc.)
Upcycle	Angola	C-DA- Waste Collection Treatment and Management
Zara Trading	Angola	Q-AA- Trading of Agri Commodities

XSML has an E&S team and an Environmental and Social Management System (“ESMS”) for identifying, assessing, and managing the E&S risks and impacts associated with its portfolio companies. The management system is applicable to all investments made across all funds managed by XSML. A qualified E&S manager, as well as other members of XSML investment and portfolio management teams are involved in the implementation process of the management system. In addition, external support is provided by E&S consultants as required. The ESMS includes categorization, E&S due diligence and monitoring procedures, organizational roles and responsibilities and workflows to be followed for investments. The scope of the ESMS is targeted to SMEs and the applicable requirements are exclusion list, host country E&S laws and regulations, and the IFC Performance Standards amongst others. XSML has an External communication mechanism for addressing issues raised by stakeholders.

Contacts

For Inquiries About the Project, Contact

XSML Capital Limited
Barthout van Slingelandt
Managing Partner
+447595075769
Barthout.vanslingelandt@xsmlcapital.com
c/o Apex Limited, Apex House, Bank Street, Twenty Eight, 1 Cybercity, Ebene Mauritius
https://www.xsmlcapital.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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Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

Task Title & Description	Anticipated Completion Date
Staff Training	01/31/2024
Enhance ESMS	01/31/2024

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