CDC Group, the UK's development finance institution (DFI) and impact investor, has made a US $60 million commitment under its African Private Credit Fund Strategy, which aims to address a significant credit market dislocation and mid-market financing gap, a situation intensified by the Covid-19 crisis.
CDC’s latest commitment covers two investments: a $30 million investment in Vantage Mezzanine Fund IV which is managed by Vantage Capital, an established Pan-African fund manager; and a $30 million cornerstone investment in BluePeak Private Capital Fund I, BluePeak's maiden fund. These commitments will enable the fund managers to increase credit supply to mid-market African companies by providing countercyclical mezzanine funding that is bespoke and meets the market need.
CDC’s African Private Credit Fund Strategy also aims to have a signalling effect by attracting more commercial investors to African markets which will in turn help to develop reliable, long-term private debt platforms that can facilitate economic growth, employment and sustainable development throughout the continent.
The investment contributes to the UN Sustainable Development Goal Decent Work and Economic Growth (SDG 8).
Clarisa De Franco, Managing Director & Head of Private Equity Funds, CDC said: "We are proud to have made our first investments executed under CDC's African Private Credit Funds Strategy. Our partnerships with Vantage Capital and BluePeak Private Capital support underserved businesses at a critical time. The investments are a testament to CDC's pledge to play an anchoring role in the success and scale of Africa's mid-sized companies through different instruments. In addition, we are confident that our partners will steward their investee firms to onward growth, generating favourable returns that will motivate commercial investors to invest in Africa's nascent private credit market as we observe its rise as a promising asset class.”
Jo Fry, Investment Director and Head of Intermediated Credit, CDC said: “Our investments in Vantage Capital and BluePeak Private Capital present an opportunity to get capital to where it is most needed. Businesses in Africa often face significant challenges in gaining access to funding and the pandemic has further tightened the availability of capital in these markets. We are excited to be supporting the continuing development of the private credit [fund] sector. This can fill a funding gap with debt capital for medium-sized enterprises whose financing needs are of a size that excludes them from accessing credit from traditional banks.”
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