1. Background

Ascent is managing two funds investing into small and medium sized enterprises (SMEs) in East Africa, namely Ascent Rift Valley Fund Ltd (ARVF I), a USD 78m fund started in 2014, and Ascent Rift Valley Fund II LP (ARVF II), a USD 128m fund, started in 2020. BII is the lead investor in both funds. BII invested USD 15m into ARVF I and USD 25m into ARVF II. The other investors include other DFIs as well as family offices, impact investors and local pension funds. The funds invest primarily in Ethiopia, Uganda and Kenya. Ascent has offices in these countries staffed with seasoned local professionals with significant experience in starting and managing SMEs. The funds’ investments cover health care (pharmacy chains, laboratories and hospitals), financial inclusion (micro finance), distribution of fast-moving consumer goods and manufacturing. We are also actively reviewing opportunities in three agri-processing opportunities. The investee companies employ more than 13,000 people of which 6,700 (51%) are female.



What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice? Before BII made an investment into ARVF I the BII staff had known the partners for more than 3 years, had seen how the team came together and how the local offices were set up and staffed. Further significant time was spent on researching the backgrounds and track records of each team member. BII also ensured that the fund partners invest significant amounts into the fund to ensure their long term commitment (as a result the Ascent partners have invested 2-3 time more into the funds than what is market practice).



Before BII invested into ARVF II it had closely monitored the teams performance on the ground by taking part in investors meetings as well as visiting the investee companies multiple times. The BII team  carefully analyzed both the performance of ARVF I in terms of financial performance, impact and compliance with rigorous requirements in terms of environmental, social and governance (ESG) standards. Further a thorough operational due diligence was performed to ensure that the funds follow best practices in terms of compliance etc.



How effectively does BII manage funds following its initial investment? BII manages the funds partly by reviewing quarterly and annual reports which cover both the financial aspects as well as social, environmental and governance aspects. Further the BII team members frequently visits the Ascent offices and investee companies. The BII team makes a special effort to act as “sounding board” for the fund management team when potentially tricky issues arise. Also, BII has been extremely helpful in sharing its expertise in e.g., ESG and compliance. While the feedback can feel tough at times it has allowed Ascent to develop into one of the leading East African fund managers. Most recently BII has encouraged Ascent to develop a more sophisticated impact measurement network to better reflect the actual impact created.