AfDB: US$ 50 million equity investment in EMP Africa Fund II LLC
Tunis, 14th December 2005 – The Board of Directors of the African Development Bank (AfDB) through its private sector window has approved a US$ 50 million equity investment in the Emerging Markets Partnership (EMP) Africa Fund II LLC. EMP Africa Fund II will be the largest investment fund operating in Africa targeting large corporations in sectors such as telecommunications, media, energy, water, environmental services, agribusiness, industry, tourism, infrastructure, financial services, mining, logistics, transport, storage, education and health.
Through this investment, the Bank will contribute to the promotion and development of venture capital in Africa. The investment will also support the development of capital markets. It is envisaged that some investment exits will be exercised through Initial Public Offer (IPO) that will in turn contribute to the financial markets developments. African stock markets offer a good vehicle through which EMP Africa Fund can sell some of its participation.
In addition to being financially viable, EMP Africa Fund is expected to generate substantial economic benefits. The Fund should also generate several opportunities to be listed on the stock market and support the banking sector in Africa by mobilizing much-needed equity to meet the equity capital increase requirements set out in the Basel II standards. The Bank’s investment in the Fund will support the development of equity, which is not readily available in Africa. The fund will also contribute to the mobilization of investment flows of US$ 4 billion to US$ 6 billion over the period 2006 to 2010.
The project will use the same business model successfully employed in an earlier fund launched in 2000 and now fully invested. The EMP Africa Fund concept is based on the financial and economic performance of the previous fund, EMP’s management capacity, and business ventures already identified in different sectors and primarily in less developed African countries.
EMP Africa Fund II LLC, with an estimated amount of about US$ 450 million, is a limited term equity fund. Its objective is to invest in the equity and quasi-equity capital of enterprises legally constituted and operating in Africa, complying with corporate governance principles as well as social and environmental standards.
On the social aspect, the Fund will contribute to the creation of about 32 000 jobs of which 40% for women. The Fund is structured in a manner to ensure an increase in social responsibility in beneficiary corporations.
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