Cosmas Butunyi
26 December 2011
Social investment firm, Acumen Fund, intends to make its maiden investment in Rwanda in 2012, as it works towards boosting its footprint across the region.
Acumen Fund’s director for East Africa Biju Mohandas, says the move is part of efforts aimed at making the firm’s operations in the region, “truly East African.”
The fund has investments in Kenya and Uganda, but exited Tanzania.
“We are looking at three opportunities in Rwanda and hope to get our first investment next year,” Mr Mohandas recently told The EastAfrican in Nairobi.
The firm’s debut in Rwanda is part of new investments it intends to make next year, to the tune of $4 million to $5 million.
Presently, Acumen Fund is concluding four other investments within the region that were recently approved — three new ones and a second round of financing to an existing investment — totalling $4.1 million.
Acumen Fund, which marks its tenth anniversary this year, invests in health, housing, water, energy, agriculture and education sectors.
Out of the $69 million the fund has invested in the past decade, East Africa has received $24 million. The rest is shared between West Africa, India and Pakistan, where it also operates.
The firm, whose headquarters are in New York, has been investing in East Africa since 2003, setting up base in Nairobi four years later to oversee its operations.
Over the years, it has tapped into local expertise and networks, and even set up an advisory council made up of: Edwin Macharia, the regional director for Africa at strategic advisory firm, Dalberg; Michael Turner, a partner at private equity firm, Actis; and Paras Shah, a partner at law firm, Hamilton, Harrison and Matthews.
As it stands at the threshold of a second decade of operation, it is hoping to further cultivate local relationships for its operations. Top on its to-do list is the establishment of an East African investment committee in the next three years. The local committee will be responsible for approving deals, currently done by a global committee.
In the long run, Acumen Fund also hopes to raise the capital that it invests in the region locally. It has been relying on philanthropic contributions.
“It is imperative to have true and strong local presence in every sense,” says Mr Mohandas, who considers East Africa as “one of the most exciting regions of the day.”
His view is based on the amount of investment opportunities that have been coming his firm’s way. Over the past three years, the fund has reviewed 350 deals, out of which eight have been approved.
“Venture capitalists should shun media hype and disaster stories and access Africa based on what they see on the ground,” he counsels.
Though Acumen Fund is keen on the East African region and West Africa, where it set up a base this year, it is considering moving into Southern Africa as well.
“We usually go deep into every region we venture into,” Mr Mohandas says.
In East Africa though, certain parts such as Burundi and the Democratic Republic of Congo remain a no-go zone for the fund.”It is not our expertise to go to recent post-conflict countries,” he says.
To him, regional expansion is not just an aspiration for the fund, but also a ‘desirable’ trait that local small and medium-sized enterprises should seek.
“Countries in the region are small and if you think of a significant scale of operations, you have to think regional,” he adds.
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