London-based Actis, and Montreal-based Cordiant have been selected by the Canadian government to form the Canada Investment Fund for Africa (CIFA) with a goal of raising $160 million. The new fund was announced April 25 in Toronto at the African Finance and Infrastructure Conference.
The Canadian and U.K. governments each will commit $20 million for the first close of $40 million for the new fund. In addition, the Canadian government will contribute another $60 million to match contributions from third party investors as those investments are made.
Cordiant, known as the International Finance Participatory Trust (IFPT) until 2004, was founded in 2001, based on changes in Canadian tax regulations that allowed for the establishment of a new asset class known as specified international finance trusts. Cordiant, one of the first such trusts, provides institutional investors with a pool of participations in private sector loans made by international financial institutions.
The only publicly disclosed investor in Cordiant is the Ontario Teacher’s Pension Plan.
The selection of Cordiant to manage funds for CIFA, is the first expansion of the firm from its original asset class into other private equity investing, albeit in an emerging market.
Actis will act as the fund’s portfolio manager. It is one of the oldest and more experienced investors in private equity in Africa. Adam Quarry, a partner at the London-based firm, says that the new fund is one of the largest ever raised for private equity investing in Africa. The fund will be invested throughout Africa, but with a focus on the larger markets and across a range of industry sectors, such as financial institutions, telecommunications, retail and natural resources.
While the range of investments that Actis makes globally ranges between $5 million to $100 million, the investments from this fund will likely be between $5 million and $50 million.
“That’s because of the smaller size of the economies in which we will invest,” Quarry says.
The fund will invest in parallel with Actis Africa II, a $310 million dollar fund, bringing the total pool of capital available to Actis Africa II manager Nkosana Moyo, to about $500 million.
The Canadian government’s participation of $80 million in the fund is part of the $400 million Canada Fund for Africa, which was established in 2002 as part of the government’s commitment to the G8 Africa Action Plan and the New Partnership for Africa’s Development.