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Business Partners International Rwanda SME Fund
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Private Equity/Venture Cap Fund - Country
Reg Ind, Financial Markets, CAF/CLA
Date SPI disclosed
April 6, 2011
Projected board date
May 15, 2011
Invested: February 1, 2012
Signed: June 8, 2011
Approved: May 16, 2011
The proposed project is to establish an $8 million investment fund, Business Partners International Rwanda SME Fund (“BP Rwanda”), capable of delivering finance and technical assistance to local SMEs in a commercially sustainable manner and generating an acceptable return to investors in the Fund.
BP Rwanda represents the fourth IFC investment in a local investment fund managed by Business Partners International (“BPI”). To date, IFC has invested $5.0 million in BP Kenya (IFC project no. 23826) and $3.7 million in BP Madagascar (IFC project no. 23825). A third fund, BP Mozambique (IFC project no. 26028, $1.6 million) is Board approved and expected to become operational in the second quarter of 2011.
The Fund aims to overcome the main obstacles in providing finance to smaller SMEs, namely: (i) lack of collateral and weak enforcement for debt providers; (ii) lack of upside opportunities for equity investors; (iii) high cost of appraisal; (iv) lack of controlling positions; and (v) limited exit potential.
Project sponsor and major shareholders of project company
The sponsor is Business Partners International (BPI), established in 2004 as a joint venture between IFC and Business Partners Limited, a South African risk financier of SMEs.
Based in Johannesburg, South Africa, Business Partners has made over 35,000 investments in SMEs in South Africa to the value of about $1.2 billion and has facilitated more than 500,000 employment opportunities.
Total project cost and amount and nature of IFC's investment
BP Rwanda has a target equity investment commitment of $8.0 million and IFC expects to invest up to $1.6 million in equity in the Fund.
IFC investment as approved by Board
1.6 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The Fund will be located in Kigali, Rwanda. Investments will be made in SMEs all over the country, although the majority are expected to be in the greater Kigali area.
Anticipated development impact of the project
The Fund is expected to have significant development impact by:
- Encouraging economic development of private sector by increasing the flow of risk capital to small and medium-sized companies in Rwanda.
- Providing much needed growth and expansion capital and value-enhancing advice to companies located in Rwanda, which currently lack access to both. The resulting stronger companies are expected to generate above-average rates of job creation.
- Improving companies' sustainable development by helping the Fund to introduce best pratice corporate governance and E&S standards.
IFC's expected development contribution
Through its investment and participation in the Advisory Committee, IFC will have the following roles:
- Assisting the Fund mobilize additional funding and reach its second closing.
- Structuring the commercial and legal terms to best in class market practices.
- Providing additional industry expertise, know-how and network by nominating a local, Kigali-based, IFC representative to the Fund's board and through close cooperation with IFC's local office.
Environmental and social issues - Category FI
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC analyzed the fund’s expected portfolio and sectors of investment, which include SMEs providing business, manufacturing, tourism and trade related services with average transaction sizes between USD150, 000 and USD250, 000. S&E risks and impacts of SMEs typically financed by BP in other countries evolve around labor and working conditions, ensuring adequate occupational health and safety, and environmental issues such as effluents, waste and hazardous materials management. Based on the analysis of the potential social and environmental risks associated with the expected portfolio and considering IFC’s investment, the IFC Exclusion List and the National laws and regulations have been determined as the Applicable Performance requirements for this project.
IFC also reviewed the funds existing Social and Environmental Management System (SEMS), and capacity to implement the same. It was found that while BP Rwanda is a new Fund; both existing BP Funds in which IFC has invested are in compliance with all S&E requirements, including the development and implementation of a SEMS, which will be utilized by BP Rwanda. The quality of S&E due diligence undertaken and staff capacity at existing BP Funds were also found to be adequate, and the Funds are reporting regularly.
As a category FI investment, and based on the review, the Fund will be required to (i) Provide a notification to IFC with regard to the adoption of the Social and Environmental Management System (SEMS), currently utilized by other BP subsidiaries, and the designation of the S&E Officer, prior to commitment; (ii) Commit to implement the SEMS to ensure that its activities are in compliance with the Applicable Performance requirements; (iii) Provide S&E training to investment staff; and (vi) Submit a periodic report to IFC as per a format to be provided by IFC.
For inquiries about the project, contact:
Mr Nazeem Martin, Managing Director
Business Partners Limited
37 West Street
Republic of South Africa
Tel : +27 (0)11 713 6600
Fax : +27 (0)11 713 6651
e-mail : email@example.com
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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