The European Investment Bank (EIB) has backed the $100m Cepheus Growth Capital Fund, an Ethiopia-focused fund, with $10m participation.

The EIB’s investment represents the first backing for an Ethiopia-focused fund and one of the first engagements with a single country private equity fund in Africa.

Ambroise Fayolle, Vice President of the European Investment Bank, said: “Our first support for private equity in Ethiopia, through the Cepheus Capital Growth Fund, will help leading local companies to expand and succeed.”  

“The fund manager’s significant financial experience and understanding of Ethiopia will ensure companies can unlock their true potential. With this new initiative the EIB will help Ethiopia, the second largest country in Africa, to meet key sustainable development goals and continue its recent impressive economic growth,” he said.

The Cepheus Growth Capital Fund, founded by two Ethiopian born partners, will invest in private sector companies all over Ethiopia involved in manufacturing, consumer goods, agriculture and agro-processing. 

The fund is expected to invest between $3m and $10m in each company. 

The EIB participation in the Cepheus Growth Capital Fund was approved by the EIB’s shareholders in September and is expected to be finalised in the coming weeks in conjunction with support from other international investors.

Cepheus Growth Capital is led by Managing Partner Berhane Demissie. 

The Addis Ababa based operations team with significant African experience in private equity, banking and fund management will manage direct investments. 

Its investment strategy is focused on job creation and supporting social improvement.

“Private equity investment will strengthen the growth of leading companies in Ethiopia and create new jobs across the country. This new cooperation with Cepheus demonstrates the European Investment Bank’s commitment to Ethiopia and support for economic growth across the country in the years ahead,” said Ambassador-Designate Johan Borgstam, Head of the European Union Delegation to Ethiopia.

In recent years the EIB has supported investment to improve water infrastructure across Ethiopia and provided credit lines to back private sector investment. 

The EIB is currently finalising support for mobile banking in Ethiopia, it is also examining possible future backing of off-grid solar investment and financing for renewable energy projects and industrial parks.