European Nations Back $250 Million African Private Credit Fund

(Bloomberg) — BluePeak Private Capital Ltd. is on track to raise $250 million for its African private credit fund that will invest in mid-sized companies that remain critically underfunded.

The fund raised $80 million in its first close from European development finance institutions including British International Investment, FMO, Swedfund, and Swiss Investment Fund for Emerging Markets.

“We are targeting $250 million on the top side of the fund,” said BluePeak co-founder and Managing Partner Walid Cherif in an interview. “The demand for private credit on the continent will get even further exaggerated with what is happening globally.”

It is important to work together and continue to invest in Africa as the US, and some other countries, redirect their finances to cover domestic priorities, the European development banks said. The US has cut some aid to the continent and plans to eliminate $555 million in contributions to a fund managed by the African Development Bank. 

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African businesses are increasingly turning to private credit as banks become more constrained in their lending.

The International Finance Corp., part of the World Bank Group, estimates that African businesses face an annual funding gap of about $330 billion.

The non-bank loans also offer growth capital without requiring companies to give away equity. 

“We are seeing more interest in the market,” said BII’s investment director Jo Fry. “Private credit funds are looking to fill a gap for mid-market firms that are looking to access more flexible, growth capital.” 

The private credit market’s assets have tripled to about $1.6 trillion in a decade, with the likes of KKR & Co. and Blackstone Inc. leaning into the business.

With the first close completed, the fund has already seen strong demand and is currently busy with due diligence on three companies, said Cherif. “We expect to do our first deal next month, and we have a focus on defensive industries such as agribusinesses, manufacturing and health care with a size of between $10 million to $20 million.” 

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