Aruwa Capital Management, a female-founded and led private equity firm focussed on Nigeria and Ghana, has launched a $20m co-investment vehicle.

Aruwa‘s mission is to provide patient growth capital to established and rapidly growing companies in the small to lower middle market and it expects to execute four to five investments, averaging $1m to $5m, over the next 24 months.

To date, capital has been raised from international and West African based family offices and high-net-worth individuals.

The vehicle is domiciled in Mauritius and management have committed capital demonstrating an alignment of interest with co-investors.

Aruwa’s team of investment professionals and portfolio managers, based in Lagos, have already developed an extensive investment pipeline of attractive opportunities, having been on the ground over the last four years.

The vehicle has a generalist sector focus, however, the current investment pipeline comprises companies in the consumer goods, healthcare, non-banking financial services and B2B services sectors.

Aruwa follows an “Invest, Operate and Empower” model, whereby the team drives the institutionalisation of investee companies through active, hands-on involvement to support internal financial control, operational improvements in processes and decision-making tools.

As well as being one of the few private equity firms owned and led by an African woman, Aruwa will be investing with a gender lens strategy.

Growth capital will be provided to both male and female-owned companies with the aim of helping address the gender equality gap within portfolio companies as well as targeting superior returns.

Adesuwa Okunbo Rhodes, Founding Partner of Aruwa Capital Management, said: "We are excited to have launched our co-investment vehicle and to be announcing our first investment in Nigeria at the same time. We are grateful to our co-investors who have put their trust in us and share our vision for the continent, generating superior returns, whilst having a significant socio-economic development impact in the countries we invest in.”

“Through applying a gender lens to our investment approach, we will ensure we allocate capital to those businesses that help empower women in society and improve the ratio of women in the workforce, at the board level and across the value chain, which is proven to improve profitability and growth and thus investment returns for us and our co-investors.”

“Being one of the few female-owned and led investment firms on the continent, I am excited about playing my part in changing the narrative with regards to women as capital allocators. I hope Aruwa will be an inspiration to other young African women who have a passion for impact investing.”

According to the African Development Bank, over 70% of SMEs in Africa, which account for a third of GDP and just under half of total employment, lack access to longer-term capital, creating an SME funding gap of more than $140bn.

According to Aruwa’s top-down analysis, growth capital demand in Nigeria and Ghana currently stands at $42bn, growing to over $160bn in the next decade.

Both commercial banks and the majority of the private equity industry focus on larger companies and larger transactions.

The mismatch of demand and supply, provides a significant opportunity for Aruwa to generate attractive returns for its investors whilst addressing the SME funding gap in its targeted countries, creating significant development impact.