Jacana Partners has created a $75million mezzanine fund, to invest in small medium sized enterprises (SMEs) across sub-Saharan Africa (SSA).
The Jacana SME Fund for Africa was launched as part of an initiative led by a number of developmental finance institutions (DFIs), which include the CDC Group and Germany’s Deutsche Investitions- und Entwicklungsgesellschaft mbH. The duo has committed to the fund.
The DFIs sent out a call for the mezzanine vehicles, which resulted in 20 managers being shortlisted. Jacana and Helios Investment Partners were selected for the initial two funds. The Helios fund is a $250m evergreen vehicle. The Jacana fund on the other hand is a standard limited partnership.
The mezzanine structure will enable the fund manager, to offer financing that is a blend of debt and equity. Mezzanine financing enables managers to hold companies for longer period, as they do not have to wait for the final exit to receive cash flows from the asset.
The structure also makes it easier to close deals with entrepreneurs, as they are frequently more wary of giving up equity. Simon Merchant [ pictured] is Jacana’s chief executive officer.