African Rivers Fund IV
Status: Approved investmentWhy disclosure?
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In case of questions
In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
XSML manages two existing private equity funds in Central Africa in which FMO previously invested, i.e. African Rivers Fund and African Rivers Fund III. These funds provide scarcely available risk capital to small and medium sized companies that operate in frontier markets such as DRC and Uganda. Currently XSML is raising its fourth fund: African Rivers Fund IV (“the Fund”).
What is our funding objective?
XSML is raising ARF IV to build on the successful strategies of ARF and ARF III. The Fund uses a mix of mezzanine and equity investments to build a diversified portfolio of SME investments. ARF IV will target a portfolio of some 40-50 investees with average target ticket sizes between USD 2-3m. The core geographical focus of the Fund will include Angola, the Democratic Republic of the Congo, Zambia and Uganda.
Why do we fund this investment?
An investment in ARF IV strongly aligns with FMO’s strategy to reduce inequalities and achieve high impact while deepening relationships with existing, strong, and experienced partners. SME financing remains very scarce in the regions where the Fund will operate, and by investing in the Fund, FMO will help empower local entrepreneurs and prove itself a valuable partner for investing in local prosperity.
What is the Environmental and Social categorization rationale?
FMO categorises this fund investment as B+ based on the risk profile of the pipeline investees and contextual risks in some of the countries of operation. The portfolio companies are expected to focus on site specific environmental and social risk management and are unlikely to be involved in projects that significantly impact land, biodiversity, indigenous communities, or cultural heritage. Therefore, only IFC PS 1-4 are expected to be triggered. XSML has already in place an Environmental and Social Management System (ESMS) broadly in line with FMO requirements and IFC PS, through which it integrates E&S matters throughout the investment process. The Fund Manager remains committed to improving E&S performance further and adapt the ESMS and related practices accordingly.
- Region
- Africa
- Country
- Africa
- Sector
- Infrastructure, Manufacturing and Services
- Publication date
- 10/27/2023
- Effective date
- 3/8/2024
- Total FMO financing
- USD 12.50 MLN
- Funding
- MASSIF
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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+