Summary of Proposed Investment
Project Number
10979
Company Name
AFRICAP MICROFINANCE INVESTMENT COMPANY LTD
Date SPI Disclosed
Jul 31, 2001
Country
Africa Region
Industry
other
Projected Board Date
Aug 30, 2001
Status
Active
Sector
Private Equity/Venture Cap Fund - Country
Department
Disruptive Tech, Service & Funds
Environmental Category
FI
Previous Events
Approved : Sep 14, 2001
Signed : Oct 5, 2001
Invested : Oct 26, 2001
Project Description
Project Description
The project involves establishment of Africap a private equity fund which will make investments in MFIs across the African continent. The fund will be closed-end with a ten year life, and will make investments in the form of equity and quasi-equity in about 10 well-performing MFIs in Africa. Africap’s fund manager will be Africap MicroVentures Ltd., a wholly owned subsidiary of Calmeadow. In addition to capital, the fund manager will provide advisory services and coordinate technical assistance funding for a full range of strategic and operational improvements to the selected microfinance institutions. These initiatives, as well as more general industry promotion activities, will be supported by a parallel grant-funded technical services facility, which will be closely coordinated with the fund.
Development Impact
Demonstration Effect. The primary objective of the fund will be to promote the commercial viability of African MFIs by investing and providing technical assistance in order to build them into successful models of commercial micro-finance. This demonstration impact will be reached as the investee companies develop into profitable and growing operations, on the model of similar institutions in Latin America, in which ProFund has invested. The fund will seek to act as a catalyst early on by having private co-investors in its ventures.
Private Sector Development , Economic and Living Standards Contribution. The entry of micro-finance institutions in the formal financial system, or the provision of micro-finance services by traditional financial institutions represents a significant step in integrating the formal and informal sectors, thereby helping the informal sector live up to its economic development potential.
More generally, the involvement of sustainable MFIs in the formal financial sector can have a powerful legitimizing impact on an emerging sector, bringing forth several benefits including: an expansion in scale and outreach of MFIs to serve an increasing number of clients among a base of poor people without any access to basic financial services; the recognition of previously marginalized people and their treatment as clients; the development of new products and services for such clients; and the improvement of efficiency and resource allocation within the financial markets.
IFC Role
IFC’s solid track record as a risk-taking investor, strategic advisor, and technical assistance provider to the financial services industry places it in a unique position to provide comfort to other investors acting as anchor investor and participating in the growth and development of the industry at this critical stage of its evolution.
IFC also has an important role in the structuring of the fund. IFC has stressed the lessons learned in its private equity investments, and the sponsor has incorporated such best practices in the structuring of this project to align the interests of the sponsors and the various investors. IFC will also play an important governance role through its participation in the board and investment committee of the fund. Finally, IFC will contribute its regional and micro-finance expertise.
The project involves establishment of Africap a private equity fund which will make investments in MFIs across the African continent. The fund will be closed-end with a ten year life, and will make investments in the form of equity and quasi-equity in about 10 well-performing MFIs in Africa. Africap’s fund manager will be Africap MicroVentures Ltd., a wholly owned subsidiary of Calmeadow. In addition to capital, the fund manager will provide advisory services and coordinate technical assistance funding for a full range of strategic and operational improvements to the selected microfinance institutions. These initiatives, as well as more general industry promotion activities, will be supported by a parallel grant-funded technical services facility, which will be closely coordinated with the fund.
Development Impact
Demonstration Effect. The primary objective of the fund will be to promote the commercial viability of African MFIs by investing and providing technical assistance in order to build them into successful models of commercial micro-finance. This demonstration impact will be reached as the investee companies develop into profitable and growing operations, on the model of similar institutions in Latin America, in which ProFund has invested. The fund will seek to act as a catalyst early on by having private co-investors in its ventures.
Private Sector Development , Economic and Living Standards Contribution. The entry of micro-finance institutions in the formal financial system, or the provision of micro-finance services by traditional financial institutions represents a significant step in integrating the formal and informal sectors, thereby helping the informal sector live up to its economic development potential.
More generally, the involvement of sustainable MFIs in the formal financial sector can have a powerful legitimizing impact on an emerging sector, bringing forth several benefits including: an expansion in scale and outreach of MFIs to serve an increasing number of clients among a base of poor people without any access to basic financial services; the recognition of previously marginalized people and their treatment as clients; the development of new products and services for such clients; and the improvement of efficiency and resource allocation within the financial markets.
IFC Role
IFC’s solid track record as a risk-taking investor, strategic advisor, and technical assistance provider to the financial services industry places it in a unique position to provide comfort to other investors acting as anchor investor and participating in the growth and development of the industry at this critical stage of its evolution.
IFC also has an important role in the structuring of the fund. IFC has stressed the lessons learned in its private equity investments, and the sponsor has incorporated such best practices in the structuring of this project to align the interests of the sponsors and the various investors. IFC will also play an important governance role through its participation in the board and investment committee of the fund. Finally, IFC will contribute its regional and micro-finance expertise.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. Stefan Harpe
Calmeadow (www.calmeadow.com)
365 Bay Street, Suite 600, Toronto, Ontario, Canada M5H 2V1
Phone: (416) 362-9670
Email: sharpe@calmeadow.com
Calmeadow (www.calmeadow.com)
365 Bay Street, Suite 600, Toronto, Ontario, Canada M5H 2V1
Phone: (416) 362-9670
Email: sharpe@calmeadow.com