TLG Capital has announced a $120 million second close for its Africa Growth Impact Fund II, just 14 months after its $75 million first close in April 2025.
This fund aims to make credit accessible to international investors in the African SME financing market while minimizing their risk exposure.
The second close is led by Proparco and Calvert Impact Capital, a subsidiary of US-based impact firm Calvert Impact, alongside six additional new investors and increased allocations from several first close investors including Swedfund.
AGIF II now counts 22 investors and carries a strategic partnership with the UK Foreign, Commonwealth and Development Office through its Manufacturing Africa programme.
In the past year, the fund has invested in nine SMEs across seven countries and sectors, providing debt facilities of $5 million to $15 million per company with longer tenors than usual from African banks, secured by a 100% principal guarantee from the originating bank.
The BOMA Model and Why It Matters
The mechanism behind the fund’s traction is TLG’s proprietary BOMA approach (Bank Originated and Mitigated Assets). Rather than lending directly to African SMEs through an offshore structure and absorbing the full credit risk, TLG originates loans through local banking partners across the continent.
Each loan carries a longer tenor than the originating bank would typically offer on its own balance sheet, and is backstopped by a guarantee from that local bank securing 100 percent of the principal.
The result is a structure that gives African SMEs access to longer-term, more patient capital than their domestic banking relationships can provide, while giving international investors a risk profile that is materially more accessible than direct frontier market lending.
Calvert Impact’s Maya Burney was direct about the significance of the model.
“For over 30 years Calvert has been and continues to be incredibly selective with whom we form financing partnerships, particularly in jurisdictions and regions with elevated perceived and real risk characteristics,” she said. “TLG has demonstrated a unique ability to innovate whilst providing meaningful downside protection in line with what commercial private capital requires.”
Proparco’s Tibor Asboth framed the structural logic precisely.
“Financing SMEs in sub-Saharan Africa requires mechanisms that help mitigate credit risk and improve investment conditions for international investors,” he said. “Through its BOMA approach, TLG seeks to address some of these challenges by incorporating guarantees from African banking institutions. Proparco believes this structure may help expand financing opportunities for SMEs in frontier markets while offering an adjusted risk profile for investors.”
Swedfund’s Jonas Tornblad connected the capital to on-the-ground impact.
“Through continued engagement with AGIF II, Swedfund helps address a critical financing gap for SMEs in Africa. Flexible and tailored credit solutions are directed to viable companies facing temporary cash flow constraints, safeguarding jobs while enabling businesses to recover, grow, and generate new sustainable employment opportunities,” he said.
The Gap Being Filled
The context behind AGIF II’s growth is familiar but no less urgent. Africa’s annual SME financing gap is estimated at $330 billion by development finance institutions, with the overwhelming majority of viable businesses unable to access the patient, medium-term capital their growth phases require.
African commercial banks, constrained by capital adequacy ratios, regulatory requirements, and short deposit funding, routinely cap lending tenors at 12 to 36 months.
For a manufacturing SME trying to finance equipment with a seven-year productive life or an agricultural processor managing seasonal cash cycles, that mismatch is structurally disabling.
AGIF II’s nine investments since first close across seven countries and seven sectors represent exactly the missing middle that development finance institutions and impact investors have spent years trying to reach.
The $5 million to $15 million ticket range sits precisely in the gap between what microfinance institutions can offer and what private equity requires.
The UK FCDO’s Manufacturing Africa partnership adds a layer of technical and policy support alongside the capital, a recognition that access to finance alone is insufficient without the enabling environment, market connections and capability-building that manufacturing SMEs need to scale.
At $120 million second close and counting, AGIF II is building the track record that the next phase of Africa’s SME debt market will need. The BOMA model is its most exportable asset.
