European Investment Bank invests US$10mn in Cepheus Growth Capital Fund

18 Oct 2017

The European Investment Bank (EIB) will support private equity investment across Ethiopia though support for the new US$100mn Cepheus Growth Capital Fund. The EIB’s US$10mn participation represents the first backing for an Ethiopia-focused fund and one of the first engagements with a single country private equity fund in Africa by Europe’s long-term lending institution.

“The European Investment Bank is committed to fostering private sector investment across Africa. Our first support for private equity in Ethiopia, through the Cepheus Capital Growth Fund, will help leading local companies to expand and succeed.  The fund manager’s significant financial experience and understanding of Ethiopia will ensure companies can unlock their true potential. With this new initiative the EIB will help Ethiopia, the second largest country in Africa, to meet key sustainable development goals and continue its recent impressive economic growth.” said Ambroise Fayolle, Vice President of the European Investment Bank.

EIB Vice President Fayolle this week visited Ethiopia on a two day visit. During his stay in Addis Ababa he met business leaders, entrepreneurs and diplomats, as well as Ethiopian government officials and representatives of the Economic Commission for Africa.

“Private equity investment will strengthen the growth of leading companies in Ethiopia and create new jobs across the country. This new cooperation with Cepheus demonstrates the European Investment Bank’s commitment to Ethiopia and support for economic growth across the country in the years ahead.” said Ambassador-Designate Johan Borgstam, Head of the European Union Delegation to Ethiopia.

The Cepheus Growth Capital Fund, founded by two Ethiopian born partners, will invest in private sector companies all over Ethiopia involved in manufacturing, consumer goods, agriculture and agro-processing. The fund is expected to invest between US$3mn and US$10mn in each company. The EIB participation in the Cepheus Growth Capital Fund was approved by the EIB’s shareholders in September and is expected to be finalised in the coming weeks in conjunction with support from other international investors.

The expected first ever support for private equity investment in Ethiopia was announced in June this year during a visit to Addis by Pim van Ballekom, EIB Vice President responsible for operations in East Africa.

Cepheus Growth Capital is led by Managing Partner Berhane Demissie. The Addis Ababa based operations team with significant African experience in private equity, banking and fund management will manage direct investments. Its investment strategy is focused on job creation and supporting social improvement.

During his visit to Addis Vice President Fayolle also addressed the African Microfinance Week conference alongside Prime Minister Hailemariam Desalegn. The African Microfinance Week is a bi-annual major conference dedicated to development of financial inclusion in Africa and is supported by the EIB. More than 300 organisations were represented at this year’s conference that focuses on enhancing microfinance support for youth employment.

In recent years the EIB has supported investment to improve water infrastructure across Ethiopia and provided credit lines to back private sector investment. The EIB is currently finalising support for mobile banking in Ethiopia, it is also examining possible future backing of off-grid solar investment and financing for renewable energy projects and industrial parks.

Over the last five years the European Investment Bank has provided more than EUR10.1bn for investment across Africa.

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