Jacana Partners, a private-equity company with $43 million under management, agreed to merge with Kenya-based InReturn Capital and raise a new fund to invest in small and mid-sized businesses in Africa.
Jacana, based in London, is hoping to raise as much as $75 million for the fund from mostly development finance institutions and invest about $1 million to $5 million in each target company, Simon Merchant, chief executive officer of Jacana, said in an interview today in Nairobi, Kenya’s capital. The group plans to eventually attract a wider range of investors including pension funds and wealthy individuals in the U.S. and Europe over the next five to 10 years, he said.
The emergence of small and mid-sized companies is essential for the creation of jobs for Africa’s expanding population and can provide a basis for stronger economic growth, Merchant said. The fund could support domestic suppliers of consumer goods looking to tap into the continent’s burgeoning middle class that has money to spend, he said.
The planned fund will target businesses operating in at least eight African nations, including possibly Ethiopia and Nigeria, according to a statement handed to reporters.
Jacana and InReturn, which have worked together since 2010, plan to complete the merger by April under the name Jacana, an indigenous African wader bird.
Jacana has two existing funds in West Africa and one in East Africa, which it runs with InReturn, Merchant said. InReturn, which has offices in Nairobi and Tanzanian capital Dar es Salaam, was founded in 2007 by Dutch entrepreneurs Bart Meijs and Steven Otto, according to a statement handed to reporters.