Zambia-focused PE fund reaches $40m first close

Monter Capital Partners in Port Louis successfully completed the first close of $40 million for its flagship $100 million fund, in a landmark raising for a Zambia private equity firm.

The fund, which focuses on growth companies in core sectors such as financial services, clean energy, and agri-business, is domiciled in Mauritius but operates from Port Louis and across Sub-Saharan Africa.

The move is significant for the Zambian private equity space not only because of the amount of capital raised – which may be the most ever raised by such a firm in the country – but because Monter has set a precedent with the regulators that other financial services companies may now follow.

Brian Malambo, founder at Monter Capital, tells African Business that “there previously was no legal framework in Zambia for the kind of structure that we put together.” The flagship fund is designed in a fused way that allows Monter to invest in a more flexible way than would otherwise be the case.

“The interesting part of what we’re doing is that we want to target special asset classes to support the primary classes […] from the financial services side, where we see opportunities in the tech space that help deliver fintech products, we can also tap into those as a secondary asset class,” Malambo says.

Monter initially set up the structure in Mauritius and then sought authorisation to operate in Zambia through the country’s Securities and Exchange Commission. The fund was granted approval on the 31^st May and therefore became the first such fund established in Zambia.

Malambo believes that other financial services firms may now seek to follow the example of Monter’s “alternate approach,” especially given the amount of capital the fund was able to raise. “We are the first ones to have this type of fund authorised,” he says.

“It’s always the case that when people see something good coming along, they want to follow suit, so we do expect a number of other players to follow suit and come up with similar products for the development of the country.”

Monter’s $40m first round raising comes at a time when it is becoming more difficult for private equity firms, both in Africa and around the world. According to the Global Private Capital Association, private investment in emerging markets dropped 22% in 2022. Global factors, such as higher interest rates in the US, are partly responsible, although local factors, like sovereign debt challenges, could also help explain the slowdown in fundraising.

Malambo says that the fund is targeting companies in South Africa, Botswana, Namibia, Zambia, Malawi, Kenya, Rwanda, Ghana, and Senegal.

The money will be used “to support the business that we are going to invest in, but also to offer technical support, support on the corporate governance side, and to help strengthen executive teams.”