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SPE Capital’s North Africa fund reaches first close with DFI support

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Published: 27 June 2024

The private equity fund will invest in fast-growing SMEs, mainly in North Africa. At least a quarter of the fund’s invested capital is earmarked for women-owned or led businesses.

Tunis, Tunisia
The Tunis-based fund, which has attracted commitments from a number of European institutions and the IFC, is a successor to SPE’s Africa Industrialization Fund | Haythem Gataa on Unsplash

SPE Capital’s SPE Private Equity Fund III (SPE PEF III), which focuses on the small and medium-sized enterprise (SME) sector in North Africa, has reached a first close with commitments totalling $140m (€131m) on the way to a target size of $350m.

Development finance institutions (DFIs) and others committing funds include the European Bank for Reconstruction and Development (EBRD) with $40m, FMO of the Netherlands ($20m), the Swiss DFI SIFEM ($15m)  and the European Investment Bank (EIB) with $9m. The International Finance Corporation (IFC) has said it would make an equity investment of up to $30m in the fund, along with providing a $20m co-investment envelope. 

The Tunis-based fund manager launched the  fund as a successor to the Africa Industrialization Fund (AIF), which attracted investment from some of the same institutions, and closed in 2020 having raised $260m.

Key sectors

The new fund is a generalist private equity fund that will invest in fast-growing SMEs, mainly in North Africa, targeting sectors such as healthcare, education, manufacturing and processing, and business services. The fund will make majority or significant minority investments, aiming to take a hands-on, value-added approach to investee firms.

SPE’s senior investment team is present in key regional markets, with offices in Casablanca, Cairo, Abidjan, and Paris, as well as Tunis. Its in-house ESG and impact team uses a proprietary impact management system to support portfolio companies in meeting ESG standards and achieving impact. 

Swiss-based asset manager responsAbility, which is handling SIFEM’s investment, said the fund would provide essential growth capital to SMEs and fast-growing companies with strong operational and financial track records, and would support the creation of better jobs and management positions for young employees in North Africa.

Employment challenge

On the latter point, responsAbility highlighted the significant challenges faced by African countries in terms of youth unemployment, with the majority of people aged 15-35 either economically inactive or vulnerably employed, as millions more enter the job market every year. 

Ralph Keitel, head of fund of funds investments at responsAbility, said his firm intended to scale up its efforts to drive economic development, create quality jobs, and promote sustainable growth in North Africa, with SIFEM’s support.

Earlier in June, responsAbility said it had issued its second financial inclusion bond in partnership with the International Development Finance Corporation aimed at improving access to financial services for individuals and MSMEs in developing markets.

The IFC noted that at least a quarter of the capital invested in SPE PEF III was earmarked for women-owned or led businesses. Its investment was announced along with other  investments aimed at boosting private sector growth in Egypt, during a visit to the country by IFC officials in May. 

Those other projects included a local currency swap agreement with Banque Misr to improve IFC’s ability to lend to Egyptian companies that earn revenues in Egyptian pounds but have limited access to foreign currency and a $100m investment in Banque du Caire, partly aimed at increasing access to finance for privately-owned micro businesses and SMEs, along with a $50m trade finance facility.

FMO said SPE’s approach of adding value to investee companies and growing the companies responsibly and efficiently aligned well with its own commercial and impact objectives.

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