In June, Financial Sector Deepening (FSD) Uganda launched a Deal Flow Facility (DFF) to increase investment in medium to large companies in Uganda.
Funded by the European Union (EU) and in collaboration with the Capital Markets Authority (CMA), the facility is expected to help Ugandan companies become “investment ready”. This will be done by actively match-making these companies to long-term investment capital, to allow businesses to focus on growth rather than short-term funding needs.
In addition to matchmaking, the facility will provide business development services to at least 220 companies over a five-year period, with the first cohort expected to start in September 2021. The facility is actively targeting relatively mature companies that are seeking investments of not less than $500,000 (about UGX1.83b).
The facility, incubated at FSD Uganda, also aims to be a one-stop center where companies can access all their transaction advisory needs – from tax, legal, banking and more. The pool of select enterprises will have access to business development support to increase their competitiveness and place them on an accelerated growth path.
Capital mobilised through investments and skills transferred along the investment cycle will contribute to two key objectives in the country’s National Development Plan III: strengthening the private sector to drive growth and create jobs; and enhancing value addition in key growth opportunities.
In the medium -to- long-term, the DFF is expected to increase the development of Uganda’s capital markets, complementing ongoing efforts by the CMA including investor education. Learnings from the DFF will provide the regulator and policy makers with objective evidence-based perspectives to shape the current and future investment climate.
FSD Uganda has built a strong legacy working collaboratively with market actors to create an enabling environment for inclusive financial services that benefit a wider section of adults in Uganda. This technical expertise, the embedded partnerships that already
WHAT IS THE DEAL FLOW FACILITY?
The Deal Flow Facility (DFF) is a technical assistance and match making initiative set up to address the persistent gap in accessing growth capital for emerging businesses in Uganda.
Established in 2021 in concert with the Capital Markets Authority and the European Union, the Deal Flow Facility is hosted and managed by FSD Uganda. The DFF aims to make over 220 Ugandan businesses ‘investment-ready’, with over 40 deals (debt / equity) closed in the next five years thus stimulating private sector growth and contributing to the country’s national development plan.
How Stanbic Bank CFO Ronald Makata Blends Governance, Technology and Human Leadership to Drive PerformanceThe facility is focused on already established businesses, building their investor readiness (where required) and connecting them to capital pools beyond bank financing, resulting in accelerated growth of Ugandan businesses and greater employment opportunities. The DFF is sector agnostic and focuses on companies with financing needs of US$ 500,000 and above.
The Deal Flow Facility does not have its own capital to invest.
WHY PARTICIPATE IN THE DEAL FLOW FACILITY?
The DFF is designed as a one-stop meeting point for prospective companies and potential investors. Through the DFF, investors will access a viable pipeline of investment ready Ugandan businesses.
HOW DOES THE DFF BENEFIT PARTICIPATING COMPANIES?
- Helping companies find the right-fit investor
The DFF matches companies to multiple investors that have a focus in the sector, geography and ticket size of investment being sought thus increasing your chances of an investment. - Building investment readiness:
The DFF team will conduct a light due diligence based on the information provided, to ascertain readiness to receive further investments. To increase chances of investment, the DFF will provide technical assistance to cohorts of companies covering:
- Business diagnostics
- Mentoring, coaching and capacity building
- Enhanced access to transaction advisers and
- Networking
The Facility aims to tailor-make its support based on each company’s needs and readiness for investment.
- Building company transaction support teams
The DFF is currently engaging various professional associations – especially lawyers and accountants – to provide their offerings to growing companies at prices that are affordable, without compromising on quality of service. The DFF provides a lucrative opportunity to these intermediaries as it presents a ready pool of companies looking for their services, reducing their discovery costs while ensuring consistent value to participating companies.
- Giving issues that affect your business/industry a strong platform and voice
Businesses are the backbone of any economy. One of the explicit aims of the DFF is to better understand barriers that companies face or continue to face in raising affordable capital. The Capital Markets Authority, as a key partner is eager to increase non-bank growth capital into Ugandan businesses, and you will have direct input in shaping this enabling environment.
WHAT ARE THE BENEFITS OF THE DFF TO INVESTORS?
- Reducing your Transaction Cost:
The Deal Flow Facility aims to build a viable investment-worthy pipeline over the next couple of years. As an investor, the DFF will present a one stop opportunity to view an investible pipeline. The DFF is sector agnostic and focuses on companies with financing needs of USD 500K and above. - Building a long-term investment-worthy enabling environment:
One of the aims of the DFF is to address systemic barriers that limit private capital (debt / equity) from flowing into the country and Ugandan businesses. The DFF aims to build an ecosystem of investors, companies and transaction advisors – taking in their experiences and feedback and working with policy makers to make the requisite changes necessary to achieve the country’s national development goals.
THE DFF PARTICIPATION CRITERIA- HOW CAN YOUR COMPANY PARTICIPATE?
The Deal Flow Facility is actively looking for companies that need growth capital of not less than US$ 500,000 (UGX 1.8 billion) in equity or debt or both, and which meet the following criteria:
- Located and operating in Uganda
- Registered with the Uganda Registration Services Bureau (URSB)
- Registered as a for-profit organization
- Been in operation for a minimum of two years
- Have audited financial accounts for at least two years and
- Demonstrated growth potential.
Businesses from all sectors can apply; women and youth-led businesses that meet the criteria above are encouraged to apply.
WHAT DO YOU NEED TO APPLY?
You basically need to provide basic information about your company which includes:
- Name of the Company and trrading name (if different from the company name
- Contact details (physical address, telephone, email, website, and key contact person)
- A brief profile of the business (not more than 500 words) highlighting:
- Your business (your product / service, number of clients, your growth trajectory)
- Why you need financing and how much are you looking for
- Ownership details and current shareholding structure
- Your governance and leadership team (Board and Senior Management) and their key areas of expertise
- Sector of operation
- Number of years in operation
Interested in learning more? Write to the DFF at: dff@fsduganda.or.ug.
