AfDB Private Sector Window Operations-AfDB Equity Investment of Us Dollars 15 Million in Atlantic Coast Regional Fund
Tunis, 4 April 2007 – The Board of Directors of the African Development Bank today in Tunis approved an equity investment of US$ 15 million in the limited term private equity fund Atlantic Coast Regional Fund (ACRF).
ACRF will be a limited term Private Equity Fund making investments in matured, profitable, growth and expansion-oriented companies with export income streams, preferably with regional scope.
ACRF will consider investment opportunities from all sectors, with particular focus on agrobusiness and transportation, industrial and manufacturing, financial institutions and companies investing in down-stream commercial infrastructure, utilities and other related sectors.
The project will help reduce poverty, impact positively the targeted region governments, develop capital markets and promote regional integration.
Approximately 11,000 jobs and 5,000 job opportunities will be created by the projects supported by ACRF. Most of the jobs will go to low income households in the industrial, manufacturing, transportation and distributive trade sectors, downstream commercial infrastructure and expansion projects sector, agro-business sector and rural agriculture extension farmers and workers.
The multiplier effect of projects to be supported by ACRF is expected to generate additional investment of USD450 million of investments to the region, essentially driven by export-oriented enterprises, contributing substantially towards raising the rate of GDP growth and reducing the rate of unemployment and increase exports in the focus sectors. As a result, USD75 million in VAT, income and corporate tax revenues will accrue to the governments in the target region. Positive development impacts will also occur in the form of Transfer of technology, development of local Entrepreneurship and technical skills in the ACRF focus region.
The AfDB participation in the proposed Private Equity Fund will enhance its catalytic role in local capital market development with emphasis on the development of the niche market for private equity and venture capital funds in the ACRF target region.
The AfDB participation in ACRF is also expected to facilitate the achievement of regional integration. The AfDB support for ACRF will ensure that the economic and social benefits accruing from the projects to be financed by the fund will be felt across the region due to the utilization of resources (labor, local raw materials, equipment, etc.) that will largely be sourced from within the region.
The African Development Bank currently has six private equity investments totaling about USD 127 million in its portfolio. The performance of these funds at this point in time is satisfactory. They are at different stages of the investment cycle. Currently, three of these funds have emerged from the investment phase to reach the portfolio development and systematic monitoring stage to ensure value enhancement prior to entering the divestment/exit stage.
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