SDG Africa

Summit Development Group ("SDG") is a private equity fund based in Botswana, with offices in Johannesburg and London. SDG invests in banks across sub-Saharan Africa and transforms them to focus on the Missing Middle: SMEs, unbanked and low-cost mortgage finance.

SDG is unique compared to other private equity funds because it builds value by providing hands on support to its investees and transforming them to become successful banks with strong leadership, performance culture, strong governance, high profitability and efficient operations that service the Missing Middle. Ultimately, we aim to aggregate our investments into a pan-African network of leading Missing Middle banks that will be attractive to a trade buyer. The SDG team and investment committee members have over 140 years combined experience in banking and FIs in Africa and emerging markets with a track record of delivering on the ground results and attractive returns to shareholders.

Alongside the capital for investment, SDG is raising a pool of technical assistance money to support capacity building at the bank level and to provide training and mentoring support to SMEs. By transforming the banks and supporting their customers, SDG provides both financial and social returns for investors looking to contribute to economic growth and development in Africa. Over 10 years, SDG looks to reach 5 million unbanked customers, finance over 190,000 SMEs and create 1.4 million jobs.

Financial description

SDG targets small and mid-size commercial banks with total assets on average between US$50 and US$150 million. The targets include development banks, commercial banks, leasing companies, microfinance banks and related financial services companies. Typical initial investment size ranges from US$2 million to US$15 million, with a maximum investment size of 20% of total investable capital (US$25 million if US$125 million investable capital).
Characteristics of investment targets include:
• Potential for developing Missing Middle customer base
• Sub-optimal performance in one or more areas, including management, governance, portfolio management and operational efficiencies
• Requires strengthening in key areas to expand business
• Clear opportunity for value creation
• Clear prospect of economies of scale
• Price justification in light of value creation
Acquiring effective management control is crucial to facilitating the transformation process at the FIs. SDG seeks to achieve majority in one of the following ways:
a) outright on its own or with like-minded investors
b) conditionally within five years from the time of an agreement to purchase a stake
c) in the case where regulations restrict a single investor to shareholding limits, SDG will invest alongside like-minded investors to obtain at least 51% and establish shareholders agreement with them to establish effective management control.