THE African Development Bank (AfDB) has approved a $15 million investment in Shore Capital Fund III, a multinational private equity fund which promotes financial inclusion by supporting financial institutions serving Africa’s low income and emerging middle-class communities.
With a target capitalisation of $150 million, the Fund will provide growth capital and capacity building to inclusive financial institutions such as Small Business Banks (SBBs), microfinance institutions (MFIs), insurance providers, leasing companies, housing finance companies and financial technology providers.
ShoreCap III will focus exclusively on sub-Saharan Africa (SSA), and intends to invest in 15 financial institutions with an average ticket size of $8 million. The ultimate objective of the fund is to expand access to affordable and responsible financial products and services for the underserved market as well as institutions looking at significant business and geographic expansion through the use of innovative technologies.
The fund manager, Equator Capital Partners, has a 13-year track record of investing in the financial sector with a focus on inclusiveness. ShoreCap III is Equator’s third generation and first Africa focused fund. The manager will operate from its offices in Abidjan, Nairobi and Johannesburg. The fund proposes an innovative model in which it involves at early stages a capacity building service provider – CapPlus Exchange. In addition to providing long term finance, the model strengthens institutions’ operational performance and develops innovative SME finance solutions to increase their effectiveness, scale and profitability.
ShoreCap III is in line with the Bank’s Ten-Year Strategy (2013-2022) as it contributes directly to achieving the Bank’s inclusive growth vision. It is also aligned with the High 5s: it improves the quality of Life for the people of Africa by enabling financial inclusion and furthers access to finance; and integrates Africa through its support to financial institutions expending regionally and using Fintech to deliver cross border services.
ShoreCap III further promotes the Bank’s Private Sector Development Strategy (2013-2017) by developing socially responsive enterprises. The Fund by growing the number of bank branches, loan portfolio and customer base is also aligned with the Bank’s Financial Sector Development Policy and Strategy (2014–2019) which priority is to increase access to finance to the underserved and to deepen the financial market. Ultimately the Fund is expected to generate about 3,500 new jobs thus contributing to the Bank’s Jobs for Youth strategy (2016-2025).