XSML is an investment fund manager operating in frontier markets in Central and East Africa. XSML, eXtra Small Medium Large, aims to grow small businesses into medium and large enterprises.
We aim to work with investors who share our passion for investing with impact. Supporting SME companies and entrepreneurs with capital and know-how in order to grow their business in a sustainable way. Our experience in private equity, with a local presence in frontier markets, allows us to appreciate risks and to generate attractive risk adjusted returns for investors.
XSML was founded in 2008. The managing partners have experience in emerging markets in asset management, corporate and development banking and restructuring. Although international investors show an increasing interest in emerging markets, the demand for finance from small and medium sized enterprises (SMEs) remains largely untapped. XSML bridges this gap.
In November 2010, XSML closed its first fund under management, the Central Africa SME Fund, which invests in the frontier markets of Democratic Republic of Congo (DRC) and Central African Republic (CAR). The fund provides private equity, long term debt and management expertise to SMEs which lack finance. By 2015, CASF was fully invested. In February 2016, XSML closed its second fund, the African Rivers Fund (ARF). This fund has a similar mandate as CASF but extends its geographical reach to Congo-Brazzaville and Uganda. Between the two funds, total assets under management are at USD 69 million.
We believe that growing a small business into a medium or large company can generate superior returns for investors in emerging markets. However, providing just capital is not enough – businesses need expertise and guidance to achieve sustainable growth. XSML provides this critical support to SMEs as an active investor. We operate in close collaboration with management and with the help of a separate technical assistance facility which supports investee companies in areas that require extra attention. Sometimes this is before investment, often directly afterwards or at later stages of the relationship. This support is critical for businesses to reach their potential.
Key investment criteria: In initial discussions with entrepreneurs we try to establish whether there is the right fit. Amongst others we look at the following factors:
- Access to products / services – in country production and/or increase access for the general population;
- Common goals – willingness entrepreneur to work with us towards common goals;
- Growth – opportunity for business growth;
- Track record – experience in sector or proven success in business;
- Trust – can we develop a relationship built on trust
The giraffe is symbolic of XSML’s philosophy.
As the tallest animal in the world, the giraffe scans the distance to appreciate risks early on and to reach for the best leaves on the trees. Like the giraffe, XSML believes in its ability to find the best opportunities in risky markets.
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