Goodwell-Alitheia garner a third of target for African SME investment fund
Impact investor Goodwell Investments, which floated a $60 million feeder fund for African small and medium enterprises (SMEs) last year, said Monday it has launched its most ambitious institutional investment fund ever chasing deals in the continent.
Christened uMunthu II, the new fund has a target of €150 million to finance innovative, scalable SMEs that improve the access and affordability of basic goods and services for unserved or underserved consumers in Africa.
The fund will be co-managed by Alitheia Capital, Goodwell’s long-term investment partner based in Lagos, Nigeria.
To date, the fund has garnered €50 million in commitments from private investors, family offices and foundations. The capital will be channelled into at least 35 new portfolio companies.
According to Els Boerhof, one of Goodwell’s managing partners: “Our mission-driven investment philosophy delivers both financial and social returns by taking an extremely local approach. Our repeated success is directly connected to working closely with our portfolio companies, bringing together both regional expertise and access to a global business network.”
In recent years, as markets shift and stagnate in most other geographies, investors are waking up to Africa’s economic potential. Across the continent, an increasingly favourable political environment, a young workforce and significant infrastructure improvements are converging to create the right ecosystem to attract capital.
The diversified investment portfolio will focus on financial inclusion (35%), food and agriculture (25%), and mobility and logistics (15%), with a secondary focus on healthcare, education and energy.
Goodwell said the latest fund seeks to continue the results of its predecessor funds which combined significant social impact with double digit internal rates of return, including 10 exits. To date, the company’s 35 existing portfolio companies have provided over €2.5 billion worth of financial services to over 30 million households, directly created 35,000 jobs and reach consumers in 47 countries.
Goodwell has 15 years’ experience leading impact-focused investments in Africa and India. It had last year launched a multi-sector private equity fund to back African SMEs. This was a cornerstone feeder for uMunthu II.
In October 2020, it had launched Belgian feeder fund Goodwell Impact Privak to channel capital from the European nation to the €100 million uMunthu fund for African businesses. This predecessor to the new Africa fund was floated in February 2018.
The firm says it has local teams in Nigeria, Kenya and South Africa in the continent who have made more than 20 investments over the last five years, balancing social impact with delivering a market rate of return to investors.
Goodwell has invested in early-stage businesses in financial services and technology companies in India and Africa, ranging from microfinance to mobile payments, rural banking, affordable housing finance and merchant payment networks. Goodwell works with local partners in India (Aavishkaar), Nigeria (Alitheia) and Ghana (JCS).
Goodwell’s African portfolio companies in the fintech field include Paga (Nigeria), Nomanini (South Africa), Musoni Systems (pan-African), MFS Africa (pan-African) and Lydia (Nigeria). In the mobility-tech field, it has invested in WhereIsMyTransport (pan-African).