DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH has announced a new US$10 million investment in Schulze Global Ethiopia Growth and Transformation Fund I (the “Fund”).

“This investment reinforces DEG’s commitment to making pioneering investments in new frontier markets,” said Bruno Wenn, Chairman of DEG’s Management Board, on the occasion of the signing ceremony.

The Fund is the first-ever international private equity fund focused exclusively on Ethiopia, with a target size of US$100 million. It will make equity investments into strongly growing SME businesses in a range of sectors, including agro-processing, industrials and manufacturing.

The Fund will provide strategic and operational advisory alongside its capital investments. Furthermore, the Fund is committed to improving standards of corporate governance, accounting and transparency.

The Fund generally seeks to deploy US$1 million to US$10 million per investment, with a strategy to target SMEs that have the potential to become industry leaders in Ethiopia. The Fund will invest with a long term view, generally holding shares for multiple years and utilizing its capital and expertise to develop companies that will remain prosperous long after the Fund’s eventual exit.

Ethiopia has the second largest population in Africa after Nigeria and the fastest growing non-energy-based economy on the continent, with an average annual real GDP growth of around 10% during the past 6 years. Nevertheless, the private sector in Ethiopia is still weak, and businesses are in critical need of capital to fund their expansion. “By investing in the Fund, DEG will be among the first foreign investors not only to provide growing private sector businesses with access to much needed capital, but also to highlight Ethiopia as an investment destination,” added DEG Chairman Bruno Wenn.

Ethiopian banks rarely undertake cash flow or risk-based lending. Consequently, many Ethiopian companies, particularly SMEs, urgently need access to long-term risk capital investments for growth, which the Fund will provide. Schulze Global’s track record, local expertise, extensive network and approach to improving environmental, social and governance standards make it an attractive manager, particularly in a fast growing frontier market.

Africa is a key region for DEG. With new commitments of 233 million euros in Africa in 2011, it was able to slightly exceed its positive result of 227 million euros in 2010 “Also in future a central focus will be put on the extension of the commitment in sub-Saharan Africa, as most low-income and high-risk countries are concentrated in this area,” said DEG Chairman Wenn.

DEG has three representative offices in Africa, which are located in Kenya, Ghana and South Africa.

Sourcehttp://www.worldstagegroup.com/worldstagenew/index.php?active=news&newscid=6671&catid=15: