AFRICINVEST FINANCIAL INCLUSION VEH
Status: Approved investmentWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
With the first close of the Africinvest Financial Sector Holding Fund (AFSH), we launched a new evergreen platform for investing in Tier II and III financial institutions in Africa. The first close included BIO (EUR 10 m) and FMO (EUR 20m, with a further EUR 10 m once additional commitments of EUR 70 m have been signed). This fund will work under the name of FIVE. While FIVE is an abbreviation of Financial Inclusion Vehicle, it symbolically signals the ambition to increase the current financial inclusion in Africa fivefold (from 20% now to ideally 100%).
What is our funding objective?
The fund will focus on Tier II and III financial institutions throughout Africa.
Why do we fund this investment?
The fund is the successor of the Africinvest Financial Sector Limited (AFSL), that FMO (from Massif) and Africinvest launched in 2007. Among comparables, the track record of the team stands out, especially where it comes to the proven capacity to realise exits. The fund has been investing in Tier II and II financial institutions in challenging countries, that are typically well beyond FMO’s own reach. In many cases, the nature of the investment and the involvement of the fund manager has taken the form of a turnaround investment. Still the fund is showing a TVPI of 1.4x, with a gross IRR of 17%. The permanent structure of AFSH/FIVE is addressing bottlenecks of a typical closed end PE fund. Supervisors in Africa are increasingly wary about PE funds as shareholder in financial institutions. Moreover, the structure accommodates the strategy of a very hands on investor in these type of institutions. At the same time, we included – we believe- substantial room for liquidity for investors.
What is the Environmental and Social categorization rationale?
The fund will focus on insurance companies, microfinance institutions and Tier 2-3 banks, whose clients are SMEs and Retail, which are least likely to engage in socially and environmentally critical projects (eg. oil & gas, mining). Therefore, E&S risk is limited. In AFSL, the E&S team of Africinvest has to be involved at DD stage and provide its recommendations or conditions, usually consisting of the implementation of an ESMS.
- Region
- Africa
- Country
- Africa
- Sector
- Financial Institutions
- Effective date
- 12/14/2017
- Total FMO financing
- EUR 20.00 MLN
- Funding
- FMO NV
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Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B