XSML announces first close of African Rivers Fund III at $54m

XSML, a fund manager active in Central and East Africa, announced the first close of the African Rivers Fund III (ARF III) at $54 million. ARF III is XSML’s third fund under management, after its maiden fund, the Central Africa SME Fund (CASF) and its second fund, African Rivers Fund (ARF), bringing total assets under management to $120 million.

ARF III targets growing, well-managed small and medium-sized enterprises (SMEs) in the Central and East African region covering Angola, the Democratic Republic of Congo (DRC), Uganda, the Republic of Congo and surrounding countries.

ARF III follows the investment strategy of its predecessor funds, CASF and ARF, by providing debt, equity and mezzanine finance to fast-growing companies in these regions. For this first close, BIO (Belgium Investment Company for Developing Countries), the Dutch Good Growth Fund (DGGF, managed by Triple Jump), FMO (the Dutch development bank), IFC (a member of the World Bank Group), which are all existing investors in Fund I and/or II, are joined by Swedfund (the Swedish Development Finance Institution) and the SDG Frontier Fund (which includes nine private and institutional investors from Belgium).

Jarl Heijstee, managing partner at XSML, said: “We have now successfully closed our third fund, African Rivers Fund III, within ten years of operation and in a challenging COVID environment. This demonstrates the continued interest and commitment from our existing and new investors in frontier markets in Central and East Africa. The private sector in DR Congo and Uganda, our core markets, as well as Angola, our new third home market, has tremendous growth potential and long-term capital remains scarce. Through our local presence in these markets, XSML is well placed to capture the opportunities as one of the few, if not the only fund manager on the ground, actively making investments in private companies, creating jobs and supporting the growth of the economy.”

Through CASF and ARF, XSML has provided some $70 million in risk capital with an investment size ranging from $100,000 to a maximum of $5,000,000. XSML has made investments in over 50 SMEs across ten sectors. Both CASF and ARF have been fully invested and 12 investments have been exited. ARF III continues the existing strategy with investments of between $100,000 and $7.5 million.