The investment is targeted at strengthening ETI’s capital base, scale up in key markets, and expand its operations across its network of 32 African countries. ETI’s wide reach makes it an ideal partner to address development challenges in Africa as well unlocking the economic potential in emerging economies on the continent.

The bank, which has already been instrumental in IFC’s Africa MSME Program, providing much needed support for the growth of small businesses across the continent, has been working with IFC since 1993 to increase access to finance, improve trade liquidity, and strengthen the banking sector in Africa. The IFC has also been providing advisory services to help in ETI’s expansion of microfinance, small and medium finance, and mortgage finance businesses.

In 2009, IFC became a shareholder in ETI following the conversion of a $100 million loan into an equity stake of 9.2 percent. This is the second time IFC Asset Management Company funds have made investments in ETI. In June 2010, IFC Cap Fund and IFC ALAC Fund committed $150 million in loans, with half the amount convertible into equity.

Furthermore, three funds managed by IFC Asset Management Company – the IFC Capitalization Fund (IFC Cap Fund), the IFC African, Latin American, and Caribbean Fund (IFC ALAC Fund), and the Africa Capitalization Fund – will invest up to $100 million in a subscription of ETI shares, for a combined stake of about 7.2 percent. This investment comes as part of a successful fundraising program by ETI, which has also attracted large institutional investors – Nedbank and Public Investment Corporation of South Africa.

Speaking on the development, Rashad Kaldany, IFC Acting CEO and Executive Vice President said: “Our relationship with ETI continues to grow and this transaction is a crucial step in IFC’s strategy of improving access to finance in Sub-Saharan Africa”

“It will enable ETI to increase lending to underserved market segments, such as agribusiness, micro, small, and medium enterprises, and climate change. It will also promote trade and integration, and generate employment where it is needed most”, he added

Further strengthening the tie between the IFC and ETI, Thierry Tanoh, former IFC Vice President for Latin America and the Caribbean, Sub-Saharan Africa, and Western Europe, has become CEO of Ecobank.

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According to Broadley, plans are underway to acquire Nigeria’s Oceanic Life, a unit of Togo’s Ecobank Transnational Inc., this year in a move that put Old Mutual in a favourable position in the West African nation and neighbouring Ghana, which are the countries with the continent’s highest growth potential.

Broadley disclosed that the company’s current focus is on being able to start its Nigerian operations before it looks beyond Africa’s second largest economy. “Nigeria will be a new operation if we go ahead and complete the transaction”, he said.

Old Mutual has 1.2 million customers in Namibia, Zimbabwe, Kenya, Swaziland, Malawi and Botswana, and 3.3 million in South Africa, sub-Saharan Africa’s largest economy. African operations excluding South Africa earned 3 percent of Old Mutual’s 994 million pounds ($1.56 billion) of pretax profit in 2011.

South Africa made 5.84 billion rand ($715.6 million) in the same period.

According to statement by Broadley, Old Mutual is set to boost share of profit from African operations to the equivalent of 10 percent of its South African pretax profit this year, and 15 percent by 2015.

“We will grow our business in Africa as fast as the market demands it,” Broadley said. “That is, as fast as we find customers that have the money for our products.”

Last month, the World Bank’s global economic prospects report estimated economic growth in sub-Saharan Africa at 5 percent in 2012 and 5.3 percent in 2013 compared with 4.7 percent last year.

MONEYWEB

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