Project detail - CardinalStone Capital Advisers Growth Fund LP

CardinalStone Capital Advisers Growth Fund LP

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Who is our client

CardinalStone Capital Advisors, a private equity firm based in Lagos, Nigeria, is raising its first fund – CardinalStone Capital Advisors Growth Fund (CCAGF). CCA was established in 2016 by Yomi Jemibewon, (“Yomi”) and Femi Ogunjimi, (“Femi”), two Nigerian investment professionals with strong investment backgrounds and track records. CCA was spun out of CardinalStone Partners (“CSP”), an independent Nigerian investment bank founded by Femi and Yomi, with two other partners, in 2008. While this is a first-time fund, Yomi and Femi have, through CSP’s Principle Investments division, made five investments in SMEs in various sectors in Nigeria. This investment presents FMO with the opportunity to play a strong role in supporting a new, promising local fund manager with an emerging track record in SMEs in Nigeria. The Fund is targeting USD 80m, with a First Close of at least USD 50m expected by H1 2018.

Funding objective

CCAGF is a West African SME fund managed by CardinalStone Capital Advisors with a Fund Term of 10 years. Even though this is a first-time Fund, the Manager has, via CSP, built a strong track record and experience in managing control positions in SMEs in Nigeria – all five of CSP’s proprietary investments were majority owned by CSP. The Fund will look for companies where the Manager can play a catalytic role in growing the business, specifically targeting those sectors deemed to be fundamental to the functioning of the Nigerian economy. The Fund will make 7-9 equity investments of ~USD 5-15mn in high-growth SMEs in Nigeria (with a small allocation to Ghana) and focus on B2B businesses in the agribusiness, industrials and FMCG sectors.

Why we fund this project

This investment presents FMO with the opportunity to play a strong role in supporting a new, promising local fund manager with an emerging track record in SMEs in Nigeria. The West-African capital markets, in particularly Nigeria remain underserved, with a large funding gap in the SME segment.

Environmental and social rationale

From an E&S risk perspective, the Fund is categorized as category B based on the Fund’s pipeline. The IFC Performance standards triggered are PS 1 and PS 2, related to the improvement and implementation of the fund’s ESMS and labour conditions. The main IFC PS expected to be triggered though the fund investments are expected to be IFC PS 1-4, as the fund is not expected to invest in high risk investments which trigger IFC PS 5-8. The fund manager has, through its proprietary investments, demonstrated strong willingness and ability to develop and improve E&S management in its investments. FMO and CDC are collaborating in reviewing and defining CCA’s ESMS and will play a key role in formalizing an ESAP and supporting CCA in further developing its E&S capacity.

Region
Africa
Country
Nigeria
Sector
Infrastructure, Manufacturing and Services
Signing date
12/21/2018
Total FMO financing
USD 10.00 MLN
Fund
FMO
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