Swedfund invests in I&P Capital to support growth of African SMEs

For ten years I&P Capital has successfully invested in small and medium-sized companies (SMEs). By partnering with I&P Swedfund will contribute to the development of SMEs in Western Africa and the Indian Ocean region.

Swedfund’s mission as a long-term and responsible investor is to co-finance businesses and thereby create real development impact in the countries we operate. Most of Africa’s private sector consists of informal microenterprises operating alongside large firms, for whom access to international capital is generally more available. SMEs are scarce, and available capital for SMEs is even scarcer.

“SMEs play an important role in economic development by creating jobs and income, broadening the tax base and ultimately decreasing poverty levels. For that reason Swedfund is very pleased to partner with I&P Capital, whom successfully has invested in and developed many SMEs in Africa. I&P Capital is located in Abidjan, Accra, Antananarivo and Port Louis and has a local hands-on approach in all its investments. I&P Capital takes pride in implementing environmental, social and corporate governance (ESG) processes in portfolio companies in order to ensure long-term sustainable businesses with strong future prospects. I&P Capital’s approach of having ESG as an integrated part of not only the investment process, but also for the development phase of its portfolio companies is unique“, says Fredrik Törgren, Senior Investment Manager at Swedfund.

“Swedfund’s support is vital in helping us to continue building and investing in businesses in Africa. Investment in the private sector is having a powerful effect on economic growth and poverty reduction in Africa. With the support from Swedfund, I&P Capital will have the capacity to create significant development impact“, says Antoine Delaporte, CEO and founder of I&P Capital.

The I&P Capital team has historically successfully invested in more than fifteen SMEs, primarily in Madagascar, and created substantial development impact. I&P Capital is currently raising capital for its third fund, I&P Capital (III). Swedfund joins the fund as an investor by investing MEUR 10. Other Development Finance Institutions such as the IFC, EIB, BIO, CDC, DEG and FMO are also co-investors in I&P Capital (III).

I&P Capital (III) is targeting investments in SMEs across different sectors with financing of between MEUR 1 and 10. Investments will be spread across West Africa, mainly Ghana and Cote d’Ivoire, and the Indian Ocean countries, such as Madagascar and Comoros. I&P Capital (III) will invest across different sectors, but emphasize investments in tourism and hospitality, financial services, agribusiness, information technology and telecommunications sectors – sectors with huge potential for development impact. I&P Capital (III) has invested in Socolait, a dairy company in Madagascar with a focus on extending the product offering dairy products and making its products more easily available around the island. . Another portfolio company, Syrse, is providing and increasing the availability of ATMs in Western Africa. Both companies are expected to create significant development impact.

I&P Capital (III) is expected to have significant development impact by:

• encouraging economic and private sector development in local communities by providing much needed equity capital and management advice for SMEs which will promote job creation;
• implementing best-practice corporate governance and social and environmental standards at the fund and investee level; and
• supporting regional integration by expanding investee companies into neighboring countries to build ‘regional champions’.

I&P Capital (III) domicile is Mauritius, the most common domicile for African funds. The main reason for using Mauritius as domicile is the well-functioning financial framework, efficient judicial authority, predictability in company- and taxation legislation and a double taxation agreements put in place with most countries, including Sweden. The country is also one of 120 countries who are members of the OECD Global Forum Peer Review Process and its process for enhanced transparency- and information exchange. Mauritius is now undergoing a scrutiny for phase 1 and 2 in combination, which is in line with Swedfund’s Owner’s instructions regarding investment domicile.