Aruwa Capital Management, the Lagos-based, women-led private equity firm, has secured a commitment of up to $8m from the International Finance Corporation (IFC) for its second vehicle, Aruwa Capital Fund II (ACF II).

The investment marks a significant milestone for the fund manager as it seeks to hit a $50m target (with a $60m hard cap) to address the persistent funding gap for small and medium-sized enterprises (SMEs) in West Africa.

The Deal Terms

The IFC’s proposal includes:

• Equity Investment: Up to $8m, capped at 20% of total commitments.
• Blended Finance: A $3m subordinated co-investment provided through the IFC’s Concessional Capital Window (IDA21).
• Geography: While primarily focused on Nigeria, the fund is permitted to allocate up to 20% of its capital to Ghana.
• Advisory: The IFC will provide capacity-building support both at the fund manager level and directly to the portfolio companies.

The “Gender Lens” Strategy

Aruwa Capital, led by founder Adesuwa Okunbo Rhodes, operates with a specific gender lens. The fund targets growth-stage SMEs that are either female-led, have gender-diverse teams, or provide goods and services that disproportionately benefit women.

This strategy targets sectors often overlooked by traditional, larger-cap private equity firms in the region, including:

• Healthcare & Life Sciences
• Consumer Goods
• Financial Services
• Renewable Energy/Cleantech

Ticket sizes for ACF II are expected to range between $1m and $3m, focusing on businesses that have moved beyond the seed stage but remain too small for global PE players.

The private equity market for early-stage SMEs in West Africa remains thin. To bridge the risk-return gap, the IFC is utilizing “blended finance.” By providing $3m in subordinated capital — essentially a cheaper, more patient layer of debt — the IFC estimates a “subsidy” level of 0.9% of the total project cost.

This mechanism is designed to de-risk the fund for other institutional investors, helping Aruwa catalyze the remaining capital needed to reach its $50m goal.

The Track Record: Fund I vs. Fund II

Aruwa’s first fund (2019 vintage) established the firm’s reputation by backing several high-growth Nigerian startups. Its second vehicle (2024 vintage) has already begun deploying capital into the consumer sector.

Fund II has already attracted a “blue chip” roster of LPs, including the Mastercard Foundation Africa Growth Fund, British International Investment (BII), EDFI ElectriFi, Ford Foundation, Visa Foundation, and Nigeria’s Bank of Industry.

The Broader Context

The expansion into Ghana is a logical step for Aruwa. As Nigeria faces ongoing currency volatility and macroeconomic headwinds, diversifying into the Ghanaian market allows the fund to hedge regional risk while staying within the ECOWAS trade bloc.

For the IFC, the investment aligns with a broader mandate to support “first-time” or “emerging” fund managers who can reach the “missing middle” — SMEs that are the primary drivers of employment but lack access to institutional credit or equity.