The Board of Directors of the African Development Bank (AfDB) has approved a EUR15mn equity investment in the Mediterrania Capital Fund III (MC III) under the management of an experienced team of Mediterrania Capital Partners (MCP) with strong transactional and operational experience in private equity (PE). MCP currently manages over EUR220mn in assets through two previous generalist funds investing in North Africa.
This contribution will allow the Fund to provide access to finance to mid-sized businesses of high growth potential and proven business models who are aiming to become regional players. With the target capitalization of EUR250mn, MCIII will invest growth equity in 10 companies in healthcare, consumer goods, retail, financial services, transport and logistics sectors.
Through the two previous funds over the past 10 years, MCP has mainly invested in Capital Growth markets in North Africa such as Algeria, Morocco, and Tunisia and is now planning to expand to Egypt and Francophone Sub-Saharan Africa, where there is emerging investment capital needs characterized by consumption-driven economies, pro-business policies, rapid urbanization, favorable demographics, and growing consumer classes. The Bank is expected to play a crucial role in the Fund’s expansion into the new investment destination including Egypt, Cote d’Ivoire, Senegal and Cameroon, through providing market knowledge as well as unlocking the African capital to achieve its financial close. As an Advisory Board member, the Bank will also ensure that transparency, social and environmental, and corporate governance best practices are adhered to both at the Fund and the portfolio company level.
The Bank’s participation in the Fund is well aligned with the Bank’s Ten Years Strategy (2013-2022) and its High Five priorities such as Feed Africa, Industrialize Africa, and Improve the quality of life for the people of Africa. The MCP has already demonstrated capacity to contribute to regional integration through development of multiple value chains regionally and internationally integrated.
The Fund’s investments will genuinely support pan-African industries while enhancing job creation, including improving skills for productivity and competitiveness. The value creation philosophy of the Fund is expected to generate significant development outcomes stemming from (i) the provision of growth capital, resulting in spill-over effects on job creation and tax revenues; (ii) regional integration by developing sustainable platforms to supply local and regional markets and export markets expansion, and (iii) development of entrepreneurial skills, introduction of new technologies and implementation of international standard corporate governance
