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Frontier market investor XSML completes €90m first close of latest African SME fund

Published: 13 March 2024

The new fund will allow the Dutch fund manager to double its investments and impact in Central and Eastern Africa and expand to new markets like Zambia.

DPXL – photo taken by Sighted Design, DRC
DRC-based DPXL specialises in designing and producing urban signs and billboards. It received funding from XSML for new equipment and materials is now looking to expand further | Sighted Design, DRC

XSML Capital, a provider of growth capital to small and medium-sized enterprises (SMEs) in Central and Eastern Africa, has just announced a first close of $98.7m (€90m) for its fourth fund.

SIFEM, managed by impact asset manager responsAbility Investments, joined as a new investor, while existing investors in previous funds reinvested in the African Rivers Fund IV (ARF IV), with some even doubling their exposure, the Amsterdam-based firm said.

“Despite the tough climate for fundraising last year and particularly in Africa, the first close of ARF IV exceeded the size of our previous fund,” said Barthout van Slingelandt, managing partner of XSML Capital.

Existing investors include development finance institutions British International Investment, FMO, the International Finance Corporation (IFC), Norfund and Swedfund.

“This is a clear sign of confidence of our investors in our investment approach and performance. They share our excitement about the opportunities to invest in talented entrepreneurs in some of Africa’s frontier markets,” Van Slingelandt said.

Zambia expansion

XSML said the new funding will allow it to double its investments and impact “over the coming years” and follow investee companies into new markets like Zambia, where it plans to open an office in the first half year of this year.

Its new fund is likely to invest in more than 50 SMEs, XSML said.

The firm’s three other funds are also focused on frontier markets in sub-Saharan Africa, with the Central Africa SME Fund, the African Rivers Fund and the African Rivers Fund III all providing debt, equity and mezzanine finance to fast-growing companies in these regions.

All four funds support promising SMEs in Central and East Africa, who struggle to obtain financing from banks and other financial institutions.

Local presence

According to the company, XSML is the only investor providing growth capital to SMEs in Central and Eastern Africa. To date, it has helped to scale more than 75 SMEs and initiated more than 150 business improvement projects across its portfolio.   

Barthout van Slingelandt, XSML Capital

In an interview with Impact Investor last year, Van Slingelandt emphasised the importance of regional presence. The company currently has offices in Kinshasa (DRC), Kampala (Uganda), Nairobi (Kenya) and Luanda (Angola).

“It’s not a fly-in, fly-out model,” Van Slingelandt, a former director at Citigroup said last year. “It’s really about local presence. We have local offices, we employ nationals, we help grow them into their roles and our team members’ responsibilities grow with the organisation.” 

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