In a bid to bridge the gap for financing in the Small and Medium Enterprises (SMEs) sector, the Afri-Invest West Africa has partnered Syntaxis Capital Africa.
The partnership will see the firms float a N12 billion private equity fund, which is expected to be injected into the SMEs in various sectors of the Nigerian economy. Some of the sectors include -manufacturing, agro-processing, healthcare, education and financial services.
Speaking at the inauguration of the fund which was done in Abuja, the Group Managing Director of Afrinvest, Ike Chioke, explained that the focus of the fund was to deepen financial inclusion for SMEs by providing long term capital for their operations.
Chioke said the fund would provide a viable option for operators of SMEs that were looking for the growth of their businesses.
The Partner and Managing Director, Syntaxis Capital Africa, Adesuwa Okunbo, described the financing gap for SMEs as huge, adding that the fund would serve as a vehicle for rapid economic growth and development.
She said, “By providing access to capital to SMEs, we are giving businesses the power to scale their activities, which will in turn increase productivity, create new jobs and generate taxes for the government.”
What may interest you about Private equity funds
Private equity funds are pools of capital to be invested in companies that represent an opportunity for a high rate of return. They come with a fixed investment horizon, typically ranging from 4 to 7 years, at which point the PE firm hopes to profitably exit the investment. Exit strategies include Initial Public Offerings (IPOs) and sale of the business to another private equity firm or strategic buyer.
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Institutional funds and accredited investors usually make up the primary sources of private equity funds, as they can provide substantial capital for extended periods of time. A team of investment professionals from a particular PE firm raise and manage the funds
Alarming challenge of SMEs
The role of SMEs in enhancing economic growth and development has overtime been widely acknowledged globally. Economic wealth all over the world is created through enterprises and the expansion of their output greatly enhances economic growth.
SMEs contribute to the economy by creating value through the production of goods and services, thus enhancing the gross domestic product. They also generate employment by creating much-needed jobs in the economy as well as expanding the export sector largely through linkages with large firms that produce for the foreign sector.
Lack of adequate funding has been the major challenge Nigerian SME owners have raised concerns about. The SMEs stakeholders have overtime lamented the absence of adequate credit facility startups and business expansions.
About the firms
Syntaxis Capital is a leading provider of growth capital to mid- to lower mid-market companies in Sub-Saharan Africa.
On the other hand, Afrinvest is a leading independent investment banking firm with a focus on West Africa and active in four principal areas: investment banking, securities trading, asset management, and investment research.