Deal Summary
Cygnum Capital, through the Africa Go Green Fund (AGG), alongside Infraco Africa and the Dutch Development Bank FMO, have provided $15 million in debt and equity financing to Mawingu Networks Limited (Mawingu), Kenya’s largest rural-focused Internet Service Provider (ISP). This financing, comprising $11 million in long-term senior debt from the AGG and $4 million in equity from InfraCo Africa and FMO, will support Mawingu’s acquisition of Habari Node Limited (Habari), a 25-year-old Tanzanian rural-focused ISP. Originally launched as Indigo Telecom Ltd. in collaboration with Microsoft and the Kenyan Ministry of Information and Communications in 2013, Mawingu has evolved into a pioneer in delivering affordable internet using climate-smart infrastructure, such as solar-powered and battery-backed towers. The Habari acquisition is part of Mawingu’s “buy-and-build” strategy to acquire successful rural ISPs across East Africa. FMO and InfraCo Africa are repeat investors, having participated in Mawingu’s $9 million Series B round in 2023, which
Deal Rationale
The financing provided for the Habari acquisition is critical for Mawingu’s mission to bridge the digital divide in underserved rural and peri-urban communities across East Africa. Moreover, the deal aligns with the sustainability agendas of all three fund managers. Mawingu’s deployment of climate-smart infrastructure, such as solar-powered and battery-backed towers, reduces reliance on fossil fuels and mitigates greenhouse gas emissions. This is consistent with the AGG’s mandate to provide long-term senior debt and mezzanine financing for projects that address climate challenges. Most recently, in September 2024, the AGG partnered with BioLite, an off-grid renewables company that provides clean-burning stoves, to fund a $5 million project to distribute clean cooking stoves in ten African countries. Likewise, InfraCo Africa and FMO’s previous financial support for Mawingu highlights its continued investor appeal.
Mawingu’s acquisition of Habari, a rural-focused Tanzanian ISP with 25 years of experience across seven regions, is a pivotal step in its "buy-and-build" strategy. This acquisition accelerates Mawingu’s East African expansion and serves as a proof-of-concept for its scalable growth model. By consolidating operations and leveraging Habari’s established market presence, Mawingu can scale faster, achieve regional market dominance, and strengthen its pan-African footprint.
Mawingu’s strong operational track record and robust financial performance inspire confidence among its investors. The company achieved a 167% increase in its customer base, growing from 7,500 in 2022 to 20,000 in 2024 while maintaining positive EBITDA and recording a 300% surge in sales in 2022. Its operational efficiency, driven by low-cost sustainable energy, locally manufactured materials, and local employment, positions it for profitability in the fragmented East African market. The continued support from FMO and InfraCo Africa underscores Mawingu’s credibility, while first-time investor Cygnum Capital benefits from the company’s demonstrated ability to scale effectively and deliver sustainable growth.
- Market Opportunity: The East African market presents a significant opportunity for expanding internet connectivity, particularly in rural and peri-urban areas. Approximately 354 million people—69% of the population—reside in rural areas, where internet penetration remains critically low. In Tanzania, only 3 million out of 12 million rural inhabitants have internet access, while 85% of rural households in Kenya lack connectivity. Major ISPs like Safaricom, Zuku Fiber, Jamii Telcom, and Poa Internet primarily serve urban centres such as Nairobi, Mombasa, and Kisumu, leaving rural areas largely neglected. This creates a substantial market gap that companies like Mawingu are uniquely positioned to fill. Mawingu’s focus on cost-efficient, climate-smart infrastructure, including solar-powered and battery-backed towers, aligns closely with regional connectivity needs and sustainability goals. Furthermore, government and global initiatives, such as the U.S.-backed target of achieving 80% internet coverage in Africa by 2030, should drive infrastructure investments in rural areas. These factors position Mawingu to capture significant market share while maintaining commercial viability in a high-demand segment.
- Risk/Return Analysis: While Mawingu’s "buy-and-build" strategy carries operational risks, these are mitigated by its investors' expertise and track record. FMO and InfraCo Africa have a proven track record of supporting Mawingu’s growth, bringing deep operational insights and regulatory familiarity to support the company’s inorganic growth strategy. AGG adds complementary experience, having recently provided a $5 million two-year loan to fund network infrastructure in Central Africa. That said, potential risks include compliance hurdles and complex cross-border licensing requirements, which could stall expansion plans, as well as competition from large East African ISPs like Safaricom, which are increasingly targeting rural areas. Promisingly for the fund managers involved in the deal, the success of the Harabi acquisition has the potential to catalyse more private investment in East Africa’s internet infrastructure sector. Successful execution of this deal could set a benchmark for scaling sustainable, commercially viable connectivity solutions, attracting further capital and advancing digital inclusion across the region.
About the Fund Manager
Cygnum Capital, formerly trading as Lion’s Head Global Partners, is a leading investment banking and asset management firm specialising in tailored and innovative financial solutions across frontier and emerging markets. With offices in London, Nairobi, Lagos, Dubai, and Amsterdam, the firm manages over US$1.1 billion in assets. Cygnum Capital's asset management division oversees six pioneering funds, including the African Local Currency Bond Fund (ALCBF), which supports local currency capital markets; the Off-Grid Energy Access Fund (OGEF), focusing on off-grid energy solutions; the Facility for Energy Inclusion (FEI), supporting small-scale renewable energy projects; the AfricaGoGreen (AGG) Fund, investing in energy efficiency and climate-friendly projects; and the E3 Low Carbon Economy Fund for Africa (E3 LCEF), targeting climate-smart services and low-carbon productivity enablers. The firm's investment thesis centres on mobilising capital for sustainable development, particularly in sectors like renewable energy, financial inclusion, agriculture, housing, and climate resilience. Cygnum Capital is known for its deep sectoral knowledge and broad product offering across corporate finance, asset management, and financial advisory services.
InfraCo Africa is part of the Private Infrastructure Development Group (PIDG)–a multi-donor organisation that seeks to alleviate poverty by mobilising private sector investment into infrastructure projects in developing countries. Through its investment arm–InfraCo Africa Investment Limited–InfraCo Africa invests directly in early-stage projects or funds experienced teams to provide project development leadership. InfraCo Africa has developed thirty-one projects through to financial close, including Khoumagueli Solar Power Station, Golomoti Solar Power Station, and the Bukuzindu Hybrid Solar and Thermal Power Station. The organisation focuses on energy, water, and transport sectors, aiming to stimulate economic development and improve living standards. InfraCo Africa's investment thesis involves taking on early-stage risks to catalyse private sector investment, thereby enabling infrastructure projects that are commercially viable and have a high developmental impact.
The Dutch Development Bank (FMO) is the Netherlands' development finance institution, with a mission to empower entrepreneurs to build a better world. FMO manages a portfolio of approximately €12 billion ($12.6 billion), investing in sectors such as energy, financial institutions, and agribusiness across Africa, Asia, and Latin America. The bank manages several funds, including the MASSIF Fund, which focuses on financial inclusion; the Building Prospects Fund, which targets infrastructure development; and the Access to Energy Fund, which aims to increase energy access in underserved regions. FMO's investment thesis centres on supporting sustainable private sector growth, with a strong emphasis on environmental, social, and governance (ESG) criteria. A unique characteristic of FMO is its blended finance approach, combining public and private funds to maximise development impact.
