XSML announces first close of African Rivers Fund III at USD 54 million

Kampala, Uganda, 1 September 2020

Today, XSML, the fund manager active in Central & East Africa, announced the first close of the African Rivers Fund III (ARF III) at USD 54 million. ARF III is XSML’s third fund under management, after its maiden fund the Central Africa SME Fund (CASF) and its second fund, African Rivers Fund (ARF), bringing total assets under management to USD 120 million.

ARF III targets growing, well-managed small and medium-sized enterprises (SMEs) in the Central & East African region covering Angola, the Democratic Republic of Congo (DRC), Uganda and the Republic of Congo and surrounding countries. The fund is named after the two most powerful rivers in Africa, the Congo and the Nile, which embody the potential of the region. ARF III follows the successful investment strategy of its predecessor funds, CASF and ARF, by providing debt, equity and mezzanine finance to fast-growing companies in these regions. For this first close, BIO (Belgium Investment Company for Developing Countries), the Dutch Good Growth Fund (DGGF, managed by Triple Jump), FMO (the Dutch development bank), IFC (a member of the World Bank Group), which are all existing investors in Fund I and/or II, are joined by Swedfund (the Swedish Development Finance Institution) and the SDG Frontier Fund (which includes nine private and institutional investors from Belgium) – an expansion of the investor base of ARF, which demonstrates their commitment and support for investing in these frontier markets.

Jarl Heijstee, Managing Partner at XSML: “We have now successfully closed our third fund, African Rivers Fund III, within ten years of operation and in a challenging COVID environment. This demonstrates the continued interest and commitment from our existing and new investors in frontier markets in Central and East Africa. The private sector in DR Congo and Uganda, our core markets, as well as Angola, our new third home market, has tremendous growth potential and long-term capital remains scarce. Through our local presence in these markets, XSML is well placed to capture the opportunities as one of the few, if not the only fund manager on the ground, actively making investments in private companies, creating jobs and supporting the growth of the economy.”

Through CASF and ARF, XSML has provided some USD 70 mln in risk capital with an investment size ranging from USD 100,000 to a maximum of USD 5,000,000. XSML has made investments in over 50 SMEs across ten sectors. Both CASF and ARF have been fully invested and 12 investments have been exited. XSML believes that sustainable economic development in fast growing frontier markets in Sub-Saharan Africa can be achieved by encouraging local entrepreneurship. Currently, many opportunities in these countries continue to remain unexploited due to the lack of risk capital and operational support. By stimulating entrepreneurial endeavors, jobs and income are created. ARF III continues the existing strategy with investments in between USD 100,000 and USD 7.5 million.

Between the two first funds XSML has provided technical assistance to over 35 companies to help them improve operations, financial management and environmental and social practices. Evidence of further impact can be found in various fields, with some 1,000 direct jobs created since 2011, over 4,000 additional pupils spread over three private schools and the addition of some 60 hospital beds, and operating theatres and maternity rooms in clinics in Kinshasa and Kampala, improving healthcare standards.

About XSML

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, eXtra Small Medium Large, founded in 2008, bridges this gap by investing in small businesses to stimulate local entrepreneurship and help these businesses grow into medium and large enterprises. XSML manages three funds with a focus on frontier markets in Central and East Africa: the Central Africa SME Fund, the African Rivers Fund and African Rivers Fund III. Our local teams of 14 investment and operating professionals have experience in emerging and frontier markets in private equity, corporate and development banking and corporate restructuring with offices in Kinshasa (DRC), Kampala (Uganda) and Luanda (Angola) to be opened in 2021.

For further information please contact:

T: +31 (0) 85 273 6029
or view www.xsmlcapital.com