Aruwa Capital Management has officially secured a substantial financial commitment from the International Finance Corporation to bolster its second investment vehicle. The Lagos-based private equity firm, established in 2019 by Adesuwa Okunbo Rhodes, will receive up to $8 million to advance its mission of bridging the SME funding gap. This strategic partnership is a critical component of the firm's broader objective to raise $50 million for Aruwa Capital Fund II.
Strategic Financial Commitment
The financial package provided by the IFC includes an equity investment of up to $8 million, capped at 20 percent of the total fund size. Furthermore, the corporation is deploying a $3 million subordinated co-investment through its Concessional Capital Window to provide a patient layer of debt. This blended finance mechanism effectively de-risks the fund for other institutional investors while catalyzing essential capital flow into the region.
Targeting the Missing Middle
Aruwa Capital Fund II is specifically designed to target growth-stage small and medium-sized enterprises that frequently struggle to secure financing from larger global private equity players. The fund targets ticket sizes between $1 million and $3 million for businesses that have successfully moved beyond the initial seed stage. This investment strategy addresses the "missing middle" of the economy, which remains a primary driver for sustainable employment across West Africa.
A Gender-Lens Approach
The firm operates with a distinct mandate to invest in companies that are female-led or possess gender-diverse management teams to foster inclusive growth. Priority sectors for capital allocation include healthcare, consumer goods, financial services, and renewable energy, ensuring a broad impact on the local economy. By focusing on businesses that disproportionately benefit women, Aruwa aims to combine robust financial returns with significant social impact and development goals.
Regional Expansion and Support
While Nigeria remains the core market for the fund's activities, the investment mandate allows for up to 20 percent of capital to be deployed in Ghana. This geographic flexibility offers a necessary hedge against the macroeconomic volatility and currency fluctuations currently affecting the Nigerian market. In addition to capital, the IFC will provide capacity-building advisory support to both the fund manager and the portfolio companies.
Building on Proven Success
The firm has established a strong reputation through its first fund by backing high-growth startups such as Wemy Industries and FairMoney. Fund II has already commenced capital deployment, with investments in consumer sector companies like Yikodeen and Toasties currently underway. This operational progress has attracted a roster of blue-chip limited partners, including the Mastercard Foundation Africa Growth Fund, British International Investment, and the Visa Foundation.
The partnership with the IFC marks a pivotal moment for Aruwa Capital as it seeks to reach its hard cap of $60 million. By securing this commitment, the firm is better positioned to address the persistent credit gap facing West African enterprises. Ultimately, this collaboration underscores the growing importance of supporting emerging fund managers who drive inclusive economic growth in developing markets.