Singapore-based Tsao Family Office, established by the family behind maritime conglomerate Tsao Pao Chee Group, has made its second Africa-focused investment by backing a private credit fund managed by TLG Capital, seeking both commercial returns and social impact.
The family office invested an undisclosed amount in TLG Capital’s Growth Impact Fund II, which had attracted $75 million in commitments toward its $200 million target by April.
The fund employs an unconventional approach of partnering with local African banks that have viable but underperforming small and medium-sized enterprises in their loan portfolios.
Many of these businesses require longer-term U.S. dollar financing to support growth but are burdened with short-term loans carrying high interest costs, limiting their ability to scale effectively.
Local banks typically cannot provide such long-term dollar loans, creating an opportunity for TLG to step in with longer-dated capital coupled with active operational support.
In some cases, TLG places team members onsite for the first 100 days of loans to help improve performance, an intervention beyond most banks’ capabilities.
TLG requires a 100% guarantee on original loan amounts from partner banks, using this both as downside protection and to assess banks’ confidence in borrowers.
Banks can identify fundamentally sound businesses needing appropriate loan terms through their existing client relationships and financial visibility.
In return, banks earn guarantee fees and benefit from successful businesses through higher-margin services like foreign exchange and letters of credit.
One transaction saw TLG extend a $10 million debt facility to Nigeria’s largest aluminum recycler. The company had acquired new machinery but lacked financing for reliable power and relied on manual, paper-based systems limiting scalability.
TLG partnered with the recycler’s bank to inject capital and implement hands-on business support, with the bank providing a 100% loan guarantee.
TLG financed new generators, placed a chartered accountant within the company, and helped convert paper inventory and accounting systems to digital platforms.
The firm also worked with the company to integrate a solar mini-grid for stable energy supply.
The Tsao Pao Chee Group traces its origins to China in the late 1800s, evolving over four generations from traditional shipping into a multinational enterprise.
The group relocated to Hong Kong after World War II and moved to Singapore in 1991. The Tsao Family Office, established over a decade ago, manages investments across public equities, fixed income, alternatives and real estate, typically deploying $5 million to $20 million per investment.
Leslie Lim, who leads Tsao’s fixed-income portfolio, told ImpactAlpha that TLG’s model was unfamiliar and involved some risk, but one the firm was prepared to accept given its impact mandate.
He noted that structuring loans in U.S. dollars removes currency uncertainty, as rapidly depreciating African currencies in countries like Egypt or Nigeria can eliminate gains for foreign investors measuring returns in dollars.
Tsao Family Office’s only other African investment was in Chancen International’s Future of Work fund, which supports education in sub-Saharan Africa. Lim said the TLG experience could enable further regional investments as the firm expands its network and deepens market understanding.
The investment reflects growing family office interest in impact investing across emerging markets, as wealth managers seek opportunities combining financial returns with measurable social benefits.
FamilyOfficeNewsAsia.com
