British International Investment

Ascent Rift Valley Fund II

East AfricaKenyaAfricaConsumer - HealthFinancial servicesManufacturing

The $130m fund will invest in a broad range of SMEs in East Africa, primarily in Kenya, Ethiopia and Uganda.

This investment was made when British International Investment was named CDC Group.

Our investment

Description of the investment.

Our commitment to the fund will enable it to further contribute to the growth of SMEs in East Africa and help deepen the private equity ecosystem in the region. The growth of these SMEs will enable their expansion and an increase in economic opportunities through job creation, of which we can expect >1,600 jobs.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact

Provide income generating opportunities through direct employment (SDG 8.5).

How?

Primary Secondary

Direct: Through providing capital and value-add to c. 10-12 SMEs, the Fund will support their regional expansion, job creation and more responsible business practices. Target sectors: manufacturing, healthcare, FMCG, retail, financial services, secondary & tertiary agriculture (sector limit of 30%)

Catalysing markets: By delivering a strong commercial performance, the fund can demonstrate the viability of investing in nascent PE markets where deal activity is currently limited (excluding Kenya). A more developed private equity ecosystem will address some of the financing gap that constrains private sector development which could unlock both economic opportunities and improved access to goods and services. Repeated positive commercial returns will, in the long-term, attract other GPs and LPs to the market. Signposts of success would be the successful raise of a follow-on fund and – in the next 5-10 years - a material increase in private equity activity in the region (both by local and regional investors).

Who?

Stakeholder Geography Characteristics
Employees

Ethiopia, Kenya (up to 45% of commitments), Uganda (up to 30% of commitments), Rwanda and Tanzania (up to 10% of commitments)

Inclusion: There is some evidence to suggest that smaller firms tend to employ more vulnerable groups within a society, such as women, youth and underserved segments of the population.

How much?

Scale Depth/Duration

Previous fund had a median CAGR of 12% on job creation above average for our Africa SME funds benchmark. If this performance is delivered by Fund II, we can expect >1,600 jobs over the lifetime of the investment.

Manager reports 11% wages uplift on employees from previous fund. It will take 5 to 10 years and repeat success for the catalytic impact to materialise.

Contribution/additionality

Contribution/additionality
  • Financial additionality: We are anchoring the fund and helping it reach a minimum viable size.
  • Value additionality: Further support to the fund manager in institutionalising business integrity and environmental and social management systems will be provided

Grid score

Grid Score

To help us direct our investments, we previously used a tool called the Development Impact Grid. It scored investments out of four, based on two factors: the difficulty of investing in a country and the propensity of the sector to generate employment. This tool was used for investments until the end of 2021. Since 2022 it has been replaced by the Impact Score.

2.7-3.5

Risk

Execution Risk
  • Relates to the risk that the fund fails to successfully fundraise and execute on strategy, therefore jeopardising both the Direct and catalytic impact. Mitigant: This risk is correlated to commercial risk and will be monitored through the standard monitoring process.
External Risk
  • Relates to probability that regardless of the fund’s Financial performance, commercial investors will remain averse to investing in these nascent markets due to perceived high risks or macro-economic dynamics. the catalytic impact relies on repeated successes from multiple players. This risk is inherent in supporting these markets and has to be tolerated.

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed an ESAP agreed with the fund. Focus areas include development and implementation of a fund ESMS, capacity development and grievance management.

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    Last updated

    When the last quarterly update of the website database occurred.

    :
    March 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D4408
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    Africa
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Consumer - Health, Financial services, Manufacturing

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Fund
    Start date :
    March 2021
    Amount :
    $25m
    Currency of investment :
    USD
    Fund Manager:
    Ascent Capital Management Africa II Ltd
    Domicile

    The company or investment fund’s place of incorporation.

    :
    Mauritius

Investments made by this fund into companies:

For further information about these companies, visit https://ascent-africa.com/

Investment name Country Region Sector Start date Status
Acme Containers Ltd Kenya East Africa Manufacturing December 2022 Active
Diani Beach Hospital (DBH) Kenya East Africa Consumer - Health July 2022 Active
Platcorp Holdings Ltd East Africa Africa Financial services January 2021 Active
Valley Hospital Limited Kenya East Africa Consumer - Health June 2022 Active

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