Investment of $15M by Swedfund in TLG Capital Fund for the backing of Small and Medium-Sized Enterprises in Africa
The Africa Growth Impact Fund II (AGIF II), a private credit fund dedicated to supporting the growth of small and medium-sized enterprises (SMEs) in Africa, has raised $75 million in its first close. The fund, which is anchored by the International Finance Corporation (IFC) and supported by development finance institutions such as Swedfund, Norfund, and BPI France, aims to provide much-needed capital to mid-market companies on the continent.
AGIF II's strategy is designed to address the financing gap many African SMEs face, offering flexible, long-term debt financing to viable businesses across various sectors. The fund's innovative structure combines debt financing with equity participation and guarantees from local banks, providing a comprehensive approach to supporting business recovery and job preservation.
One of the key investments from AGIF II is expected to create 200 direct and 752 indirect jobs. In Nigeria, Terra Aqua, an aluminium recycling company in Ogun State, is set to receive $7.5 million in debt financing. This investment, contingent upon meeting environmental, social, and governance (ESG) benchmarks, will contribute to the company's growth and job creation within the region.
SMEs play a crucial role in Africa's economy, employing 80% of the workforce and generating nine out of ten new jobs on the continent. By focusing on these businesses, AGIF II seeks to promote sustainable economic development and job creation, particularly in the manufacturing, healthcare, agriculture, and telecommunications sectors.
Jakob Larsson, Senior Investment Manager at Swedfund, highlighted the importance of SMEs in Africa's economy, stating, "Protecting existing jobs and creating new ones is crucial for poverty reduction in Africa." Swedfund, which has invested $15 million in AGIF II, aims to bolster SMEs across Africa, helping them overcome capital access barriers and contributing to Africa's broader economic transformation.
AGIF II builds upon the strategy of its predecessor, Africa Growth Impact Fund I, and partners with local banks to offer loans to SMEs. The fund's approach supports business recovery and contributes to job preservation and creation, all while fostering inclusive economic growth across the African continent.
With the support of prominent international development finance partners and private capital, AGIF II is well-positioned to accelerate the growth and impact of African SMEs, ultimately contributing to a more prosperous and sustainable future for the continent.
[1] IFC (2021). Africa Growth Impact Fund II raises $75 million in first close. [online] Available at: https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industry/finance/pressroom/press+releases/africa-growth-impact-fund-ii-raises-75-million-in-first-close
[2] TLG Capital (2021). AGIF II raises $75 million in first close. [online] Available at: https://www.tlgcapital.com/news/agif-ii-raises-75-million-in-first-close/
[3] Swedfund (2021). Swedfund invests SEK 150 million in TLG Capital's Africa Growth Impact Fund II (AGIF II). [online] Available at: https://www.swedfund.se/en/news/swedfund-invests-sek-150-million-in-tlg-capitals-africa-growth-impact-fund-ii-agif-ii/
[4] Swedfund (2021). Supporting SMEs in Africa. [online] Available at: https://www.swedfund.se/en/what-we-do/sectors/supporting-smes-in-africa/
[5] Norfund (2021). Norfund invests in Africa Growth Impact Fund II. [online] Available at: https://www.norfund.no/en/news/norfund-invests-in-africa-growth-impact-fund-ii/
- The strategy of the Africa Growth Impact Fund II (AGIF II) involves utilizing money raised, such as the $75 million from its first close, to offer flexible, long-term debt financing for viable businesses in various sectors, facilitating investing in African SMEs.
- By partnering with development finance institutions like Swedfund, which has invested $15 million in AGIF II, and investing in businesses like Terra Aqua in Nigeria, AGIF II aims to promote business growth, job creation, and support sustainable economic development within Africa's business and finance landscape.
