Pearl Capital Partners fund reaches €12m first close

Uganda-based private equity firm Pearl Capital Partners Uganda (PCP) announced that it has reached a €12 million first close on its fourth impact fund.

The Yield Uganda Investment Fund received a €10 million anchor investment from the European Union’s (EU) International Fund for Agricultural Development (IFAD) and €2 million from the National Social Security Fund Uganda.

The EU will also provide an additional €3 million Business Development Support facility that will be managed by IFAD and be used to support capacity building directly to portfolio companies.

Deloitte Uganda is working with PCP on fundraising, which they expect will be completed at the fund’s final target of €25 million through the addition of like-minded private investors by the end of 2017.

The fund intends to provide equity investors with a net IRR of 9 percent and the IFAD with a net IRR of 7 percent over its five-year investment period, according to materials on PCP’s website.

Its investments in approximately 20 locally-managed business across the agricultural value chain will range from €250,000 to €2 million and take the form of equity, semi-equity and debt. Specifically, the fund will look to partner with small and medium-sized businesses in the inputs supply, processing, and storage sectors, among others.

“The fund will offer presently-lacking long-term capital to entrepreneurs in the agricultural sector and contribute to the modernization and expansion of agribusiness companies while proving quality financial returns for investors,” the EU ambassador to Uganda, H.E. Kristian Schmidt, said in a statement.

In addition to financial return, the Yield Uganda Investment Fund aims to support efforts to eradicate poverty in Uganda through support for agriculture-related business that it hopes will improve rural household incomes and access to markets, create jobs, and support food security.

Agriculture is the top economic driver in Uganda, a nation of 38 million located in east central Africa; one third of the work force is employed in agriculture and coffee currently accounts for a majority of export revenues.

PCP explains in its promotional materials that Uganda’s stable government, favorable rainfall patterns and abundant labor supply support a promising outlook for its agribusiness sector.

Overall GDP growth in Uganda averaged 7.1 percent between 1998 and 2007 and was projected at 4.9 percent last year and expected to reach 5.5 percent this year, according to the International Monetary Fund.