CDC Group Plc, the UK’s development finance institution (DFI) and impact investor, said Tuesday it has made a $60 million commitment to two alternative investment funds as part of its African private credit fund strategy.
The commitment covers two investments of $30 million each to Vantage Mezzanine Fund IV, which is managed by Vantage Capital, and a cornerstone investment in BluePeak Private Capital Fund I, the maiden fund of BluePeak.
These commitments will enable the fund managers to increase credit supply to mid-market African companies by providing countercyclical mezzanine funding that is bespoke and meets the market need.
Vantage Capital, a South African multi-asset alternative investment fund manager, had marked the first close of its fourth mezzanine fund with commitments of $207 million from European and US-based commercial investors two months ago. Development finance institutions including International Finance Corporation, CDC and Switzerland’s SIFEM also pitched in. IFC itself had committed $25 million to the fund.
Vantage Mezzanine Fund IV, which has a target of $350 million, will chase mid-sized African businesses with flexible capital.
Africa-focussed alternative asset management firm BluePeak Private Capital has also hit the first close of its maiden $200 million credit fund.
BluePeak, headquartered in the Tunisian capital of Tunis, made the first close in May at just over $100 million.
CDC said its private credit fund strategy aims to address a significant credit market dislocation and mid-market financing gap, a situation that has intensified by the Covid-19 crisis.
The strategy also aims to have a signalling effect by attracting more commercial investors to African markets. This will, in turn, help to develop reliable, long-term private debt platforms that can facilitate economic growth, employment and sustainable development throughout the continent, CDC said.
“Businesses in Africa often face significant challenges in gaining access to funding and the pandemic has further tightened the availability of capital in these markets,” said Jo Fry, investment director and head of intermediated credit at CDC.
Fry said that development of the private credit fund sector can fill a funding gap with debt capital for medium-sized enterprises whose financing needs are of a size that excludes them from accessing credit from traditional banks.
– The Capital Quest