Celebrity-backed “8 Miles Fund I 'A'” is to hold a first close before the end of the year, according to sources close to the process. The fund has a target size of $750 million and will take a multi-sector pan-African investment approach, according to a statement from the Africa Development Bank.
ADB, a development finance institution, recently approved an equity investment of $50 million in the 8 Miles Fund following a June 2009 meeting with philanthropist and musician, Bob Geldof, and seasoned private equity professional, Mark Florman – sponsors of the 8 Miles Fund – to discuss their intention to set up a large Africa-focused private equity fund.
The fund will be managed by Florman – who is currently a senior advisor and non-executive chairman with London-based financial advisory firm Spayne Lindsay & Co. – according to a summary report by the International Finance Corporation, which is considering investing up to $60 million in the fund.
Florman has extensive experience in both private equity and philanthropic initiatives. During his seven-year stint as a senior principal for London-based private equity firm Doughty Hanson, Florman co-founded the Centre for Social Justice in 2004 – a UK think tank aimed at reducing poverty – and founded Build a School in Africa in 2002.
The fund’s first close is expected early in the fourth quarter with more than $150 million in committed capital, according to a source with knowledge of the matter.
The fund will likely make 20 investments, ranging from $15 million to $80 million, with an expected average size of $32 million, according to the ADB.
The fund’s portfolio will include businesses in financial services, consumer goods and infrastructure, according to the ADB, adding such investments will contribute to jobs, income, poverty reduction and food security for the continent.
“Follow-on equity investment in existing portfolio companies will be used to support growth and regional expansion opportunities in these companies,” stated the ABD.
The bank said the fund will target existing companies that require capital for expansion plans and will aim to “invest equity and quasi equity in greenfield and brownfield projects in Africa”.
Poverty can be alleviated through aid, but will only be eliminated through trade, investment and growth.
Geldof and Florman also expressed interest in “ideas that would strengthen the development impact of the proposed fund and to make it a role model for similar operations in future,” according to the ADB.
Geldof has recently been a vocal supporter of state-backed initiatives which provide financing for African investment. In June the activist praised the UK government's development finance body, CDC Group, stating it was an important resource for African development.
“Poverty can be alleviated through aid, but will only be eliminated through trade, investment and growth,” Geldof stated at a 2009 CDC event. “And it is trade and investment that will support the dynamism and enterprise of people in Sub-Saharan Africa and South Asia and give them the jobs, dignity and opportunity that they deserve.”
A spokesman for 8 Miles Fund declined comment.
Toby Mitchenall contributed to this report.