The firm is planning to invest in a pharmaceutical manufacturer that operates in seven countries in sub-Saharan Africa and supplies 20 countries on the continent, Cherif says from Tunis. The investment will be used to help build a manufacturing plant in East Africa, he says. BluePeak is also carrying out due diligence for an investment in a sub-Saharan African telecoms services company, Cherif adds.
The fund, set up in 2019, sees potential in private debt as a way to finance small, family-owned African businesses reluctant to give up control by selling equity. The fund reached a first close at $116m in September. Cherif hopes the fund will soon hit the $150m mark with money from two new investors and is targeting a final close of $200m in 2022.
The fund’s largest office is in Tunis, and it also has offices in Nairobi and Lagos. Cherif says the fund is “sector agnostic,” though interested in exploring investments in healthcare, education and manufacturing. It plans to make long-term investments with a target maturity of five to seven years.
- As well as finance, the fund also advises in terms of environmental, social and governance (ESG) strategies, succession planning and board composition, Cherif says.
- In future investments, the fund will usually be looking to take a board seat, he adds.
Grit Real Estate
The firm is backed by equity investment from a range of development finance institutions: CDC Group in the UK, the European Investment Bank, the US International Development Finance Corporation, FMO in the Netherlands and CDC Tunisia. It targets companies with earnings before interest, taxes, depreciation and amortisation of more than $3m and revenue between $10m and $80m.
The plan is to make investments worth between $10m and $25m. BluePeak provides debt instruments including mezzanine finance, preferred equity and convertibles. “We don’t do plain vanilla senior debt,” says Cherif, a former investment officer at the World Bank’s International Finance Corporation. The fund says its investments are designed to maximise impact for women and marginalised groups.
In January BluePeak made its initial investment in London-listed African property investor Grit Real Estate. BluePeak is jointly investing $31.5m with Ethos Mezzanine Partners in the form of a perpetual note.
- Grit CEO Bronwyn Knight said the funding will allow the company to increase its exposure to the light industrial sector in Kenya and to healthcare in Mauritius.
- The investment will be used to help fund warehouse expansion in Nairobi for Orbit, which makes personal hygiene and home care products.
- Some of the money will also go into St Helene private hospital in the Curepipe Region of Mauritius.
Cherif is open to the idea of further investment in Grit. “If a need arises in the future, we would like to support it.”
The bottom line
BluePeak sees private debt as a tailor-made investment tool for scaling-up small African businesses.
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