The German development finance institution DEG has committed €30m to the AfricaGrow fund of funds (FoF), managed by Allianz Global Investors.
David Weiss, lead investment manager for DEG’s investment in the fund, said: “DEG specializes in mobilizing long-term financing in emerging and developing markets. The AfricaGrow fund of funds is an excellent opportunity to provide capital to SMEs and venture capital funds in Africa who experience a significant funding gap.”
KfW Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), together with Allianz Global Investors, has set up this fund of funds that will invest into African private equity and venture capital funds.
The aim of the fund is to finance innovative SMEs and start-ups in reform-oriented African countries through local funds in order to promote sustainable economic and social development.
For measuring this impact, the AfricaGrow fund will use DEG’s Development Effectiveness Rating.
Guided by the Social Development Goals, this impact rating tool uses five categories to assess the development contributions of each investment, such as decent jobs, local income and community benefits.
The fund is a cooperation between public and private partners and it starts with initially €170m.
Apart from DEG’s €30m, €85m comes from the Federal Ministry for Economic Cooperation and Development, and €55m to €70m from Allianz companies.
“With a portfolio of 40 private equity funds in Africa and 5 local offices, DEG is one of the largest private equity investors in Africa and welcomes this opportunity to cooperate with Allianz and KfW in this milestone transaction,” said Carola Bose, DEG’s team Head for African Private Equity Funds and Equity.