Kinshasa, Democratic Republic of Congo, 8 December 2021
Today, XSML, the fund manager active in Central & East Africa, announced the final close of the African Rivers Fund III (ARF III) at USD 81 million, exceeding its target of USD 75 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 154 million.
According to Barthout van Slingelandt, Managing Partner at XSML: “This final close of ARF III marks an important milestone, as we successfully closed three funds in eleven years of operation and in a COVID environment that continues to be challenging. It is ten years ago since we made our first investment with Fund I and since, we have grown our footprint and teams to deploy more than USD 100 million across our three funds.”
ARF III targets growing, well-managed small and medium-sized enterprises (SMEs) in the Central 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 Nile Rivers, which embody the potential of the Central and East African 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 final close, FISEA, managed by Proparco (the French development institution) joined DALHAP (private impact investor) and Norfund (the Norwegian development fund) and first close investors 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), Swedfund (Swedish development bank) and the SDG Frontier Fund (which includes nine private and institutional investors from Belgium). Most investors in Fund III have invested in XSML’s earlier funds, but DALHAP, Norfund, Swedfund and SDG Frontier Fund are new investors, demonstrating commitment and support for investing in these frontier markets.
Van Slingelandt: “We are happy that Proparco will be joining again as investor and to have DALHAP, Norfund, SDG Frontier Fund and Swedfund as new investors in Fund III. Our investors are committed to supporting us in frontier markets in Central and East Africa. With our local offices, XSML continues to capture investment opportunities in private companies, creating jobs and supporting economic growth.”
Through CASF, ARF & ARF III, XSML has provided over USD 100 million in risk capital with an investment size ranging from USD 100,000 to USD 5,000,000. XSML has made investments in over 60 SMEs across ten sectors. Both CASF and ARF have been fully invested and 20 investments have been exited. To date, ARF III is over 50% committed in new investments. 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 between USD 100,000 and USD 7.5 million.
Between its 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, from education to healthcare, with approximately 3,000 direct jobs created since 2011, over 4,000 additional school children spread over three private schools, the roll-out of operating theatres, maternity rooms, and over 70 hospital beds in clinics in Kinshasa and Kampala, improving healthcare standards.
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 15 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 2022.