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News > Private Equity > Fundraising

Capria to invest in additional fund managers in Africa

Africa Global Funds
Nov. 20, 2018, 1:44 p.m.

Word count: 540

With first close of its new $100m “network fund”, Capria has launched an investment cycle with a focus on partnering with and investing in fund managers in Africa that invest in early-growth businesses. 

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With first close of its new $100m “network fund”, Capria has launched an investment cycle with a focus on partnering with and investing in fund managers in Africa that invest in early-growth businesses. 

With 6 of 16 managers in the Capria Network already from the continent, Capria is now looking to expand its network to work closely with additional managers from East Africa, West Africa and Francophone West Africa to help them build world-class globally-connected funds. 

Capria recently established an office in Nairobi and hired Mercy Mutua, an accomplished Regional Director, to head up outreach to new partners and to support the regional network.

“Capria plans to select 3-5 funds to work closely with, to solve the roadblocks that make it so hard to achieving excellence and great returns,” said Dan Kranzler, Senior Partner, Capria.

While fund management is a tough business in all emerging markets, African managers face an extra share of difficult challenges, including building strong deal pipelines, operating efficiently across countries, and finding alternative sources of fundraising.

Fund managers have to find strong businesses that fit their investment profile. 

Many businesses identified look good on the surface, but have issues found once looking under the covers. 

The resulting lack of investible pipeline slows down the deployment process, reducing investor confidence. 

More importantly, shallow pipelines limit the choice of investments, potentially leading to compromised selections or overpaying, thus reducing the odds of strong returns. 

Capria works closely with its partners across Africa to build and execute strategies to increase pipeline depth and apply rigorous investment discipline to ensure only the best deals are made.

Within Africa, early-growth investments are often lucrative at the top line but can be expensive to transact and manage, substantially depressing net returns. 

Challenges include dealing with opaque and fragmented laws, leadership capacity building, taxation complexity, and country specific regulatory frameworks. 

Most LPs prefer to invest in fund managers that are domiciled in tax / regulation friendly jurisdictions, further increasing operating costs for funds. 

These challenges are just the tip of the iceberg, but if addressed using regional and global best practices, it’s possible to find opportunities for outsized returns.

As funds grow, managers need to seek multiple new channels for fundraising; they can’t rely solely on small local family offices and DFIs. 

The clear option is to go to global investors as well as regional LPs. 

But these potentially highly-effective alternate fundraising options that would enable managers to keep pace with Africa’s growth potential continue to be out of reach for many. 

Capria helps fund manager partners upgrade their operations to adopt global best practices, across everything from team building to governance to branding. 

Once operating at a high level, fund managers have a much stronger ability to prevail in the increasingly- competitive world of fundraising from regional and global LPs.

Capria invests in venture capital, private equity, and other debt and equity funds backing early- growth businesses in emerging and frontier markets.

Capria is looking to grow current network- wide assets under management from $259m to more than $750m million by 2020, positioning its network of collaborating fund managers to capture part of the $1+ trillion “missing middle” opportunity.

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