JPMorgan, U.K. Government Invest in Fund for Africa Business

JPMorgan Chase & Co. and the U.K.’s Department for International Development will contribute a combined $20 million to a private-equity fund investing in startup businesses operating in East Africa.

DFID’s Impact Fund, which is managed by CDC Group, a development finance institution owned by the U.K. government, will provide $15 million to Novastar Ventures and JPMorgan the rest, the companies said today in an e-mailed statement. The money will finance health care, education, housing, energy and sanitation projects that are expected to reach as many as 2 million people over the next decade, they said.

“Private sector capital is crucial to economic growth in East Africa,” Peter Scher, head of corporate responsibility at JPMorgan Chase, said in an e-mailed reply to questions. “There is a recognition that governmental and aid organizations cannot do this alone.”

Investors should accelerate investments to build infrastructure in Africa and form public-private partnerships that will help improve economic and social conditions, Kenyan President Uhuru Kenyatta said on April 2.

It marks the first investment released from the 75 million-pound ($124 million) Impact Fund announced by the U.K. in 2012 to provide capital to companies and programs that will generate returns in sub-Saharan Africa and South Asia.

Social Good

Novastar is focusing its investments on “early-stage businesses that offer massive social benefits to low-income households,” Managing Director Steve Beck said on April 5 by phone from Nairobi, the Kenyan capital.

“Novastar will accelerate the existing investment program of SpringHill Equity Partners, an informal investor circle that has been making venture investments in East Africa,” Beck said.

Novastar in March made its initial investment in Bridge International Academies, which has built more than 250 schools in Kenya, according to the statement. The Nairobi-based chain of nursery and primary schools charges students an average of $5 a month, according to its website.

“Market-based approaches, along with interested investors, can attract the private sector capital necessary to create change,” Scher said.

Private equity funds invested more than three times as much in sub-Saharan Africa last year as they did in 2012 as the number of deals during the period rose to 84 from 58, according to the 2014 East Africa Private Equity Confidence Survey released by Deloitte. In East Africa, the number of deals in Kenya last year was 12, five in Rwanda, and three each in Uganda and Tanzania, according to the report.

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