PE firm DPI bets on Ivory Coast lender Cofina; Mediterrania exits

 PE firm DPI bets on Ivory Coast lender Cofina; Mediterrania exits

Development Partners International (DPI) has struck its first new deal after overshooting its target to raise one of the largest private equity funds to invest in Africa.

The PE firm said it is investing €60 million ($64 million) for a significant minority stake in financial services company Groupe Cofina.

This transaction will help the company to accelerate growth for Francophone West and Central’s Africa’s small and medium enterprises (SMEs).

Groupe Cofina was founded in 2014 by Jean-Luc Konan and is headquartered in Abidjan, Côte d’Ivoire. It seeks to bridge the “missing-middle” – the gap between microfinance and traditional institutional financing – and to serve consumer finance customers across Francophone West and Central Africa. Since creation, it has provided companies with almost €1.5 billion of credit.

Groupe Cofina has also expanded its reach across the region, with presence today in Senegal, Côte d’Ivoire, Guinea, Gabon, Mali, Congo, Burkina Faso and Togo. The business also has operations in France through a subsidiary.

SME lending and microfinance is still relatively nascent in the region, and the sector remains underpenetrated with entrepreneurs and SMEs lacking access to loans to scale their businesses. Today, it is estimated that only 20% of African SMEs have access to bank loans. Prior to the COVID-19 pandemic, International Finance Corporation estimated the financing gap for African SMEs at $331 billion.

“There is significant demand in the SME market for the products and services Groupe Cofina provides, that will help entrepreneurs grow their businesses, while also driving financial inclusion and creating a positive impact on African economies,” said Babacar Ka, Partner at DPI. “The business is fast evolving into a technology-powered provider of financial solutions to the under-served mass market”

This deal adds to four previous investments by its latest fund, ADP III. These investments were into Channel VAS, a fintech business providing mobile financial services; Tunisian tomato producer SICAM; Kelix Bio, a biopharmaceutical platform; and MNT-Halan, an Egyptian fintech provider.

DPI was advised by Asafo & Co and KPMG while Groupe Cofina was advised by ADNA.

Mediterrania gets an exit

Meanwhile, the transaction marks the second divestment for Mediterrania Capital Partners’ MC III fund, after a partial exit in TGCC’s IPO in December 2021.

Mediterrania entered Cofina’s cap table in April 2018 by acquiring a significant minority stake.

During Mediterrania’s tenure, Cofina launched mobile and web-based banking applications to facilitate branchless transactions, enabling customers to perform financial transactions from their mobile phones and computers.

As a result of the group’s product and geographic expansion, Cofina’s net banking income rose to €40 million in 2021.

Under Mediterrania’s partial ownership, Cofina opened its Burkina Faso and Togo subsidiaries and set up an office in Paris to fulfil the demand of the African diaspora in the French capital.

During the same period, Cofina founded Fin’ELLE, a microfinance unit for female entrepreneurs.

Hatim Ben Ahmed, Managing Partner at Mediterrania, said: “When we invested in Cofina in 2018, we saw the tremendous opportunity that the company represented, not only from a financial point of view but also as a key promoter of social inclusion in Africa. Four years later, all our expectations and predictions have been exceeded.”

KZ and Partners was the legal advisor to Mediterrania.

Vivek Sinha

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