📋 Tender Overview
Region
Africa
Country
Africa
Sector
Infrastructure, Manufacturing and Services
Publication date
10/27/2023
Effective date
3/8/2024
Total FMO financing
USD 12.50 MLN
Funding
MASSIF
Environmental & Social Category
(A, B+, B or C)
B+
Who is our customer
XSML manages two existing private equity funds in Central Africa in which FMO previously invested, i.e. African Rivers Fund and African Rivers Fund III. These funds provide scarcely available risk capital to small and medium sized companies that operate in frontier markets such as DRC and Uganda. Currently XSML is raising its fourth fund: African Rivers Fund IV ( the Fund ).
What is our funding objective
XSML is raising ARF IV to build on the successful strategies of ARF and ARF III. The Fund uses a mix of mezzanine and equity investments to build a diversified portfolio of SME investments. ARF IV will target a portfolio of some 40-50 investees with average target ticket sizes between USD 2-3m. The core geographical focus of the Fund will include Angola, the Democratic Republic of the Congo, Zambia and Uganda.
Why do we fund this investment
An investment in ARF IV strongly aligns with FMO’s strategy to reduce inequalities and achieve high impact while deepening relationships with existing, strong, and experienced partners. SME financing remains very scarce in the regions where the Fund will operate, and by investing in the Fund, FMO will help empower local entrepreneurs and prove itself a valuable partner for investing in local prosperity.
What is the Environmental and Social categorization rationale
FMO categorises this fund investment as B+ based on the risk profile of the pipeline investees and contextual risks in some of the countries of operation. The portfolio companies are expected to focus on site specific environmental and social risk management and are unlikely to be involved in projects that significantly impact land, biodiversity, indigenous communities, or cultural heritage. Therefore, only IFC PS 1-4 are expected to be triggered. XSML has already in place an Environmental and Social Management System (ESMS) broadly in line with FMO requirements and IFC PS, through which it integrates E&S matters throughout the investment process. The Fund Manager remains committed to improving E&S performance further and adapt the ESMS and related practices accordingly.
