Emerging markets private equity specialist, CDC Capital Partners and Norfund, the Norwegian investment fund for developing countries have launched Aurora Capital, an alliance targeting risk capital investments in the small and medium sized enterprise sector in developing countries.
Aurora Capital will take forward, build and manage an existing family of 14 country-focused funds in Central America, Africa, South Asia, and the Pacific Islands, that have been managed by CDC over the past four years. There are as many as 80 different funds in the portfolio with a range of maturity dating back to 1994. The committed capital of these funds is $175 million and CDC is the largest single investor with commitments of $59 million. The funds typically make investments of between $200,000 to $2 million and total number of investments from the funds is between 170 and 180 deals.
Norfund has committed to co-invest a further $50 million alongside other investors by taking stakes in second round and new SME funds which will be managed by the Aurora Capital Group.
Aurora Capital will begin operations in mid 2001 with a London-based management team, with Thorbjrn Garder assuming the position of managing director and Michael Ellen as operations director. Garder said there will be a four to five-strong team operating in London. He added that in some of the target countries the management companies have partners. Out of the 10 management companies, six are wholly owned and four have partners. CDC has a strong presence in some of these markets, but not all which is being addressed
by building strong partnerships, says Garder.
There are already plans to start fundraising for second and third generational funds in the more mature markets and Garder hopes to start work immediately on up to four regions, with plans in the pipeline for Central America, Sri Lanka and Ghana.
Per Emil Lindoe, managing director of Norfund, hopes Aurora will provide a vehicle that will strengthen cooperation between companies in the Northern and Southern hemispheres. He said: “Aurora Capital offers a unique combination of risk capital and commercial experience to the SME sector in developing countries. Aurora will also provide an important vehicle to strengthen cooperation between companies in the Northern and Southern hemispheres.”