The Board of Directors of the African Development Bank (AfDB) Group approved on Wednesday 28 April 2010 in Tunis an equity investment of USD 30 million in Helios Investors II.
The project consists of a second-generation private equity fund that will focus on 6-8 large platform transactions. It will continue the first fund's successful investment strategy of originating and managing a small number of large transactions, with intensive operational involvement.
Helios has already demonstrated a strong private sector development impact through Fund I. It is expected that this will continue with its second Fund. Helios II investments will contribute to strengthen their portfolio companies' balance sheets, thereby encouraging lending from local and international banks. Its activities will be primarily focused on companies located in the West African (the Economic Community of West African States), East African (the East African Community) and the Southern African (Southern Africa Development Community) sub-regions.
The Fund will seek to invest in sectors that are critical to countries' economic growth, geared toward domestic markets, and that have high capital-intensity prospects. More specifically, the Fund will target investments that:
Create economic efficiencies and reduce the cost of doing business;
Seek to provide an efficient alternative to the public sector service provision and are undergoing effective regulatory reforms; and/or
Are in sectors where structural cost advantages have been under-exploited.
As a result, sectors will include financial services and insurance, telecoms, power and utilities, transport and logistics, agro-allied and consumer products. It is expected that around 50% of the Fund's commitments will be invested in infrastructure-related projects.
Through its participation with its equity contribution of USD 30 million, the Bank will be the first pan-African DFI to participate in the Fund. Its involvement will help the Fund reach its target size, strengthen its capital base and serve a demonstration effect.
The project more specifically adheres to the Bank Group Regional Integration Strategy 2009-2012, which emphasizes the importance of mobilizing resources for regional infrastructure and supporting the involvement of regional private sector groupings in regional infrastructure projects. The Fund is aligned to Private Sector Operations strategy to invest in private equity funds that have broad geographic and sector diversification to maximize deal flow through co investment opportunities, and to broaden market presence.
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Onike Nicol-Houra
