The UK’s development finance institution, BII, has backed a fund which addresses funding gap for women-led enterprises in West Africa.
Aruwa Capital Management, a Lagos-based impact investment firm, has raised $35m (€30m) at the second close of its latest fund which focuses on addressing the early-stage funding gap for female entrepreneurs in Nigeria and Ghana.
With a focus on healthcare, energy access, financial services, and consumer goods, Aruwa’s investment strategy targets sectors which are deemed essential for the inclusive economic development in West Africa.
Aruwa Capital Fund II has drawn investments from British International Investment (BII) which invested $5m into the fund, along with Mastercard Foundation Africa Growth Fund, Visa Foundation, and EDFI Management Company through the EU’s Electrification Financing Initiative.
In addition, the Bank of Industry, Nigeria’s oldest and largest Development Finance Institution, has also backed Aruwa, making it the first local institutional investor in the fund.
Having reached 90% of its $40m target, the fund has already surpassed the $20m final close of its Aruwa Capital Fund I in 2022, with plans to potentially increase the target to $50m, with a hard cap of $60m later this year.
Aruwa Capital Fund II has so far made two investments in Yikodeen, a local manufacturer of industrial safety boots, and Toasties, a fast-growing casual dining chain.
Benson Adenuga, coverage director and head of Nigeria office at BII, said: “We are delighted to be the first international development finance institution supporting Aruwa for its efforts in catalysing the West African early-stage investing ecosystem. Aruwa is well positioned to bridge the early-stage funding gap, particularly for women entrepreneurs in Nigeria and Ghana. Their gender-lens investment approach aligns with BII’s commitment to fostering inclusive economic growth while mobilising more institutional capital.”
Job creation
Looking at the performance of Aruwa’s inaugural fund, its portfolio companies have achieved average revenue growth of 22x in local currency while securing follow-on investments at valuations approximately seven times higher than Aruwa’s original entry, according to BII.
Across both funds, more than 200,000 direct and indirect jobs have been supported to date in companies of which 73% are either founded or led by women.
Adesuwa Okunbo Rhodes, founder of Aruwa, said: “In the midst of the current challenging fundraising environment, we are excited to have raised 90% of our target fund size for Fund II. This indicates our investors’ confidence and trust in our ability to execute on our proven investment strategy and double down on achievements recorded so far.”
