IFC, a member of the World Bank Group, is investing US$10mn in CardinalStone Capital Advisers Growth Fund (CCAGF), a private equity fund launched and managed by CardinalStone Capital Advisers (CCA)- an investment management firm, to expand access to finance for high-growth, underserved small and medium enterprises (SMEs) in Nigeria and Ghana.
SMEs account for 96% of businesses in Nigeria and 85% of the private sector in Ghana. The growing middle class in both presents an opportunity for SMEs to scale up, however access to long-term capital remains a challenge. CCAGF will seek to support SME growth opportunities by providing long-term capital as well as operational expertise to ensure business sustainability.
Yomi Jemibewon, Co-Founder and Managing Director of CardinalStone Capital Advisers, said: “This funding represents a significant step towards catalyzing growth in small and medium enterprises in Nigeria and Ghana. We look forward to working with the IFC as a partner in this fund as we strive to continuously bring best practices in operating standards to our investments and investee companies.”
CardinalStone Capital Advisers is seeking US$100mn in total for the CCAGF fund and has secured US$50mn in capital commitments from the CDC Group, the UK’s development institution; Kuramo, a leading African investment firm; FMO, the Dutch Development Bank; and NSIA, the Nigerian sovereign wealth fund; among other investors.
“IFC’s investment in CardinalStone will spur growth of SMEs and facilitate much-needed job creation, while creating the ecosystem for a more robust local private equity and mezzanine financing market,” said William Sonneborn, IFC Senior Director for Disruptive Technology and Funds. “By supporting SMEs in fast-growing markets, we hope to bring best practices that raise the bar for operational improvements and environmental and governance standards across the investee companies.”
Despite being a first-time fund manager, the CCA team has experience investing in these markets, having deployed US$29mn in capital in 5 investments across several sectors. Their investment in cassava starch production in Nigeria is already creating value for hundreds of farmers who can now transform their raw materials into value-added products, reduce reliance on imports and improve supply chain efficiencies.
This investment is part of the IFC SME Ventures program that supports high-growth entrepreneurs in frontier markets by investing in funds that provide risk capital. The program also offers technical assistance on a range of issues, from management skills to accounting, to build a more sustainable environment for SMEs. SME Ventures funds have financed over 100 SMEs, which have created over 6,000 direct jobs, many more indirect jobs, and generated tax revenues for governments.
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