Metier raises $182m to support mid-market African companies

AFRICAN BUSINESS AND ECONOMYSeptember 27, 2023 at 1:01 PM UTC

Metier announced the first close for Metier Capital Growth Fund III, raising just over $182 million, with further commitments expected by the final close positioning Metier to exceed its targeted fund size of $200 million. The fund is the successor fund to the Metier Capital Growth Fund II of 2015/2016 which invested in eight portfolio companies in the retail, out-of-home dining, healthcare, industrial services, FMCG, manufacturing, and telecommunications sectors.

The Fund has a geographic focus on sub-Saharan Africa and is expected to make eight to twelve equity and equity-related investments into mid-market companies with high growth features in sectors that benefit from regional economic and demographic trends such as population growth and increased urbanization. “Our active deal pipeline is characterized by growth capital investments that will have a positive impact on climate change, create decent jobs with a focus on gender-lens investing, support the connectivity of rural communities, and enhance the development of businesses across Africa,” said Paul Botha, CEO and Co-founder of Metier. “Beyond delivering top quartile returns, Metier’s core objective is to contribute towards positive and sustainable impact across Sub-Saharan Africa.”

The Fund has attracted investment from both international and South African investors, including significant commitments from international development finance institutions, who were motivated by the Metier team’s focus and track record of investing for developmental impact while delivering top-quartile private equity performance.

Key Takeaways

Small and medium enterprises (SMEs) are the backbone of the global economy, comprising the majority of businesses in nearly every region. In developing nations, SMEs constitute 90% of the private sector and contribute over 50% of total employment. In Africa, SMEs play a vital role by offering approximately 80% of all jobs, serving as a key driver of economic expansion. Sub-Saharan Africa alone boasts 44 million micro, small, and medium enterprises, with the majority falling under the micro category. However, these businesses require access to capital for growth. Unfortunately, 51% of them face challenges in securing adequate funding, hindering their potential. Credit constraints pose a significant hurdle for SMEs, preventing necessary investments for expansion and resulting in stagnation. As SMEs play a crucial role in employment generation, barriers to financing translate into obstacles to poverty alleviation and economic development. Blended finance mechanisms can bridge this essential gap and aid these firms in fulfilling their potential.