XSML, a private equity fund manager active in Central & East Africa, has announced the final close of its African Rivers Fund at $50m.

The African Rivers Fund is XSML’s second fund under management, after its maiden fund the Central Africa SME Fund (CASF), bringing total assets under management to $69m.

The three existing investors in CASF, IFC (a member of the World Bank Group), FMO (the Dutch development bank) and Lundin Foundation (Canadian foundation), were joined by BIO (Belgium Investment Company for Developing Countries), CDC Group (the UK development finance institution), Dutch Good Growth Fund (DGGF) and FISEA (Proparco - AFD Group) - an expansion of the investor base for the African Rivers Fund.

Barthout van Slingelandt, Managing Partner at XSML, said: “The final close of our second fund demonstrates a continued interest and commitment from our investors in frontier markets as Congo DRC.” 

“The private sector in Congo has tremendous growth potential and long term capital is scarce, evidenced by our ability to invest some 26% of ARF’s total capital during the fund’s first year,” he said.

The African Rivers Fund (ARF) targets growing, well-managed small and medium-sized enterprises (SMEs) in the Central & East African region covering Democratic Republic of Congo (DRC), Uganda and Republic of Congo as well as - over time - Burundi. 

ARF follows the successful investment strategy of its predecessor, CASF, by providing debt, equity and mezzanine finance to fast-growing companies in the Central African region. 

Through CASF, a $19m fund with 80% allocation to DRC and 20% in CAR, XSML provided risk capital with an investment size ranging from $100,000 to a maximum of $500,000. With this first fund, XSML made 32 investments in SMEs across 10 sectors. 

CASF has exited four investments and has so far returned close to 40% of invested capital to investors.  

Since February 2016, ARF has made investments in 11 companies in a range of industries and has committed 45% of its capital to 16 companies.

“With the experience and network that we have built up over the last six years, XSML is well placed to capture opportunities on the ground in DRC.  And since August 2016, we are building a pipeline of potential investments in Uganda, through our office in Kampala.  We are an active investor in privately held businesses in Congo and surrounding countries, and this helps creating jobs and supporting the growth of the economy,”  Van Slingelandt said.

XSML believes that sustainable economic development in fast growing markets as the DRC and Uganda can be achieved by encouraging local entrepreneurship. 

Currently, many opportunities in these countries remain unexploited due to the lack of risk capital and support. By stimulating entrepreneurship, jobs and income are created. The African Rivers Fund continues CASF’s strategy with investments in between $100,000 and $5m. 

Between the two funds XSML has provided technical assistance to some 28 companies to help them improve their operations and skills.  

Evidence of further impact can be found in various fields, with over 500 jobs created since 2011, over 4,000 additional pupils spread over three private schools and the addition of some 40 hospital beds, an operating theatre and maternity rooms in a clinic in Kinshasa, improving healthcare standards.