September 8, 2014
Today, XSML, the fund manager active in Central Africa, announced its investment in Hydrotek SARL based in Lubumbashi, DRC. Hydrotek sells pipes, pumps and valves for water and other liquids and provides installation & maintenance services. The company’s main customers are mining companies and the local water company in Katanga, DRC. The second largest client groups are construction companies and private customers.
Kinshasa, Democratic Republic of Congo
There is currently no industrial production of quality plastic pipes and valves in Katanga province, leaving Congo to rely on imports of pipes, pumps and valves. Hydrotek distinguishes itself from the market by providing high quality products according to international standards. Its focus on quality has enabled Hydrotek to become a preferred supplier to many of the large mining companies operating in Katanga province.
With increasing demand Hydrotek needed to invest in larger inventory as well as its own centralized warehouse. The investment by XSML will be used to build its own warehouse and distribution center. Another part of the funding will be used to build inventory allowing the company to quicker fulfill orders for a wider range of products from its stock.
The Managing Director of Hydrotek, Alain Nkongolo states: “With the financing provided by the Central Africa SME Fund, Hydrotek can build its own warehouse and increase the range of products available to our customers. Availability of product is critical for our customers. Our new warehouse will further strengthen our preferred supplier status with large mining companies.”
Jarl Heijstee, Managing Partner at XSML says: “The combination of high quality pipes and service make Hydrotek unique in Congo. Our investment enables Hydrotek to work from one centralized warehouse instead of different locations improving availability of products further. By focusing on quality and service Hydrotek has gained preferred supplier status with many large mining companies in Congo.”
Hydrotek is the twenty third investment made by CASF and its twentieth investment in DRC. CASF is an investment fund investing in small and medium-sized enterprises in the Democratic Republic of Congo and the Central African Republic. The fund is based on the belief that sustainable economic development in the fast growing markets of DRC and CAR can be achieved by encouraging entrepreneurship. Currently, many opportunities in these countries remain unexploited due to the lack of risk capital and support. By stimulating entrepreneurial endeavors, jobs and income are created. CASF is a USD 19m fund with 80% allocation to DRC and 20% in CAR. CASF provides risk capital with an investment size ranging from USD 100,000 to a maximum of USD 500,000. Investors in CASF are IFC, FMO and the Lundin Foundation.
About Hydrotek SARL
Hydrotek is a distributor of pipes, pumps and valves used for water and other liquids. Besides providing pipes, pumps and other fittings, Hydrotek also installs and maintains water and liquid distribution systems. Hydrotek was established in 2012.
XSML is an independent private equity fund manager, founded in 2008, with a focus on frontier markets. While building and managing funds for these markets, XSML, eXtra Small Medium Large, aims to help grow small businesses into medium and large enterprises. XSML was founded in 2008. The managing partners have an extensive background in emerging markets in the areas of asset management, corporate and development banking and corporate restructuring. Our experience has shown that demand for finance from small and medium sized enterprises (SMEs) remains largely untapped despite increased interest in frontier markets from international investors. XSML bridges this gap between international investors and SMEs in these markets. XSML is currently fund-raising its second fund: the African Rivers Fund.