Johannesburg, November 11, 2019 - Today, at the Africa Investment Forum in Johannesburg, FMO and the European Commission (EC) signed the guarantee agreement for the FMO Ventures Program. The EC has provided EUR 40 mln in guarantees to FMO’s innovative early-stage investment program. This is FMO’s second guarantee program within the European Fund for Sustainable Development (EFSD).
FMO Ventures Program will contribute to FMO’s ambition to further strengthen its focus on early-stage investments that deploy an innovative, technology-enabled business model. Such start-ups, often led by young entrepreneurs, have high developmental impact in our markets. They lower the production and delivery costs for essential products and services, thereby accelerating or improving access to previously unaffordable products and services for large underserved segments of the population.
The program will aim to invest a total of EUR 200 mln in both fund and direct investments in Africa, the European Neighbourhood and Asia (excluding China). The direct investments will focus on start and scale-ups in AgriTech, Energy Access, and FinTech. The fund investments will have a more generalist approach, thereby also targeting tech-enabled solutions in, amongst others, education, healthcare, transportation and logistics.
Next to equity investments, the Program will also have a dedicated technical assistance program, for which the EC is providing EUR 6.5 mln, that will seek to support investees of the FMO Ventures Program and will promote the development of local Venture Capital ecosystems in emerging markets in general.
Enabled by a blended finance solution
The FMO Ventures Program is enabled by a blended finance solution supported by both the EC and the Dutch Government. The EC’s guarantee, which comes from the EFSD will support the program’s exposure to Africa and the European Neighbourhood. The Dutch government supports the Program via investments from the Access to Energy Fund (EUR 12 mln), Building Prospects (EUR 24 mln) and MASSIF (EUR 24 mln). FMO itself will provide EUR 140 mln.
Fatoumata Bouaré, Chief Risk and Finance Officer of FMO said: “We are very grateful for the support of the EU and Dutch government for the FMO Ventures Program. This blended finance solution allows FMO to invest in early-stage opportunities that have high development potential and lower investment risk. By executing transactions at an earlier stage than FMO’s more traditional business, this program can enhance our commitment to innovation, supporting local businesses, and accelerating technology transfers in emerging markets.”
For an illustrative example of an investment by the new FMO Ventures Program, please click on the video below: