The
weekly roundup of Africa's Private Capital news
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Each week we sift through most Africa-related private equity, infrastructure and venture capital deal news stories, market opinion articles and information pieces and winnow them down to those we feel are the most important and interesting for investors, companies and their advisors. Here's the latest issue, covering all happenings over the last 7 days. We hope you find the service useful. We'd be delighted if you shared it with any interested colleagues and/or partners. If they would like to receive their own weekly copy, they're more than welcome
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This week's issue supported by...
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The week in brief...
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In Africa's biggest private equity deal last week, The Abraaj Group teamed up with three financial institutions, the European Bank for Reconstruction, DEG and PROPARCO to set up North Africa Hospital Holdings, a new $200 million healthcare group focused on opportunities in Egypt and Tunisia. Abraaj's investment in the deal is $145 million, with the remaining partners providing the balance. The group already has four hospitals in its portfolio, two in Tunisia and two in Egypt, including the Cairo Medical Center which Abraaj acquired in June last year. This move is in line with the private equity firm's strategy of targeting acquisitions among firms and assets which benefit from the growing demand for healthcare, consumer products and education in North Africa.
In a double first, Enko Capital announced its acquisition of an undisclosed, minority stake in listed-Zambian insurer, Madison Financial Services. It represents both the first deal for its $48.25 million Africa Private Equity fund and the first deal the fund manager has made in Zambia. Madison Financial has posted annual revenue growth rates of 16% over the last three years and nearly tripled its operating profits over the same time period. The company is well-positioned to capitalize on the rapidly-expanding demand for consumer financial products in the markets it operates in. Meanwhile, in other deal news, impact investor Phatisa's Pan Africa Housing Fund is reportedly on the verge of investing in another Kenyan residential housing development, this time in Nakuru. This follows hot on the heels of its $3 million deal announcement the week before, in a development planned for a Nairobi suburb. The Star reports that talks for the Nakuru project are at an advanced stage.
South African investment company Ovation Capital has inked an agreement to fund the development of Montero Mining & Exploration's phosphate assets in the Western Cape. The deal calls for Ovation to undertake pre-feasibility and bankable feasibility studies for an integrated fertilizer plant close to Montero's phosphate projects. Ovation will earn a 30% stake in the holding company once the studies have been completed.
In other mining sector news, Bloomberg reports that X2, the mining investment company set up by former Xstrata CEO Mick Davis, looks set to head out on the acquisition trail having completed an "initial" fund raise of $5.6 billion from investors who include commodities trader Noble Group, private equity firm TPG Capital and a number of pension and sovereign wealth funds. X2's hunt will take it to the world's largest miners, including those in Africa, as their management and boards look to re-shape their portfolios following a decade-long acquisition binge and the current commodity price slump. The timing could be propitious, but challenging, because while there are many assets to acquire, the number available to sell privately is declining as low valuations make it difficult for company managers to divest.
Continuing on the fundraising theme, Schneider Electric, the French power company, is teaming up with a number of DFIs, including CDC, PROPARCO and the European Investment Bank, to set up the Energy Access Venture Fund, a Euro 54.5 million private equity fund which will invest in 5-year instruments for up to 20 African SMEs delivering electricity infrastructure for up to one million first-time power consumers on the continent. And in other DFI news, among the summaries of investment information or SIIs on the IFC's website are two pertinent to Africa. In the first, the agency is considering a $40 million commitment to private equity fund manager Actis's Africa Real Estate Fund 3, a projected $400 million, 8-year closed-end private equity fund which will target investments in real estate companies and projects in sub-Saharan Africa. And in the second, it's considering a $101 million loan to KKR-backed Afriflora, the Ethiopian flower farmer and marketer of cut-rose products. The funds would be used to support the company's expansion program and refinance certain equity investments. Both commitments are expected to considered for approval by the IFC board in April.
As usual, we found a number of other interesting articles and opinion pieces last week which can all be reviewed in the latest issue of the newsletter. Among them, a piece discusses how while the magnitude of Africa's yawning infrastructure deficit is well-documented, it offers investors considerable challenge and opportunity. In a guest post for the Financial Times, Aubrey Hruby and Dawda Jawara call for a better understanding of, and more innovation in, scaleable infrastructure financing models. They explore the trade finance model used by the Afreximbank as an example. Reuters held its African Investment Summit last week which gave rise to a number of stories, including Blackstone's investment strategy for power and transmission infrastructure investment in Africa. Finally, a new merchant banking firm announced itself last week. ThirdWay Africa Partners hopes to tap into the growth promised by Mozambique's resource sector. Set up by a trio of partners, two of whom are Goldman alum, the firm will have offices in Maputo, London and Madrid.
You can review these and other stories by
scrolling
down and reviewing the headlines, abstracts and links.
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Private Equity
Abraaj backs new North African healthcare group with $145mln
// reuters.com
The Abraaj Group will be the main backer of North Africa Hospitals Holding Group, a new $200 million healthcare group, in a consortium with the European Bank of Reconstruction and Development, DEG and PROPARCO. The company currently owns four hospitals in Egypt and Tunisia. Abraaj is investing $145 million in the new group, while EBRD is investing $25 million and DEG and PROPARCO are investing $15 million each.
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Private Equity
Enko Capital takes stake in Zambia's Madison Financial
// liquidafrica.com
Enko Capital's $48.25 million Africa Private Equity fund has acquired a minority stake in one of Zambia's leading insurance-based financial services companies, Madison Financial Services. The size and value of the stake were not disclosed. The deal is Enko's first in Zambia and aims to benefit from the returns created by the rapidly-expanding demand for consumer financial services in the country.
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Private Equity
Ovation Capital funds phosphate mine in Western Cape
// yahoo.com
South African-based investment firm Ovation Capital has inked a deal with Montero Mining and Exploration to fund the development of Montero's phosphate rock projects in the Western Cape. Ovation will fund pre-feasibility and bankable feasibility studies for an integrated fertilizer plant close to Montero's projects, earning a 30% interest in the holding company once the studies are completed.
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Private Equity
Phatisa's PAHF mulls $2mln-$3mln investment in Nakuru
// the-star.co.ke
Hot on the heels of last week's announcement that Phatisa's Pan Africa Housing Fund has invested in a residential housing development project in Karen, a suburb of Nalrobi, The Star reports that talks are at an advanced stage for the fund to commit $2 million to $3 million to a residential project in Nakuru, its first deal away from Kenya's capital.
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Cairo Medical Center, part of new Abraaj-backed North African Hospital Holdings' portfolio
Image Credit: Cairo Medical Centre
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Private Equity
With $5.6bln war chest, X2 ready for mining acquisition hunt
// bloomberg.com
X2, former Xstrata CEO Mick Davis's new global mining investment platform, has completed its initial fund raise of $5.6 billion and is on the hunt for assets. The timing is propitious, just as slumping commodity prices and a decade-long acquisition binge force mining companies to re-shape their portfolios. Bloomberg reports that X2 is looking to buy from some of the world's largest miners. Investors in the investment company include TPG Capital, Asian commodities trader Noble Group as well as sovereign wealth and pension funds. Read more...
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Private Equity
IFC considers $101mln loan for KKR-backed Afriflora
// ifc.org
According to a Summary of Investment Information, (SII), posted on their website, the IFC is considering a $101 million loan to KKR-backed Afriflora, the Ethiopian flower farmer and marketer of cut-rose products. The funds would be used to support the company's expansion program and refinance certain equity investments. The board meeting to discuss approval of the loan is projected to be April 3rd, 2015.
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Private Equity
Schneider Electric and DFIs back new Euro 54.5mln energy fund
// out-law.com
French power company Schneider Electric has teamed up with a number of DFIs, including CDC, PROPARCO and the European Investment Bank, to set up the Energy Access Venture Fund, a Euro 54.5 million private equity fund which will invest in 5-year instruments for up to 20 African SMEs delivering electricity infrastructure for up to on million first-time power consumers on the continent. Read more...
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Private Equity
IFC mulls $40mln commitment to Actis's latest real estate fund
// ifc.org
In a Summary of Investment Information, (SII), posted on their website, the IFC states it is considering a $40 million commitment to private equity fund manager Actis's Africa Real Estate Fund 3, (AREF3), a projected $400 million, 8-year closed-end private equity fund which will target investments in real estate companies and projects in sub-Saharan Africa.
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This week's issue also supported by...
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Projects & Portfolio Companies...
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Private Equity
Rockwood-backed Tsebo to merge with Allterrain Services
// spyghana.com
Having acquired 75% of Allterrain Services in a $21 million deal in December 2014, Rockwood-backed Tsebo Outsourcing Group and Allterrain have announced that they will fully merge, creating a pan-african services group with combined revenues of approximately $498 million, 26,000 employees and a presence in 22 countries. As reported by Bloomberg in mid-February, Rockwood plans to exit Tsebo this year in order to execute the fund's first disposal before beginning to raise its second fund.
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Private Equity
Food Concepts sets up FCPL with Pioneer Foods
// bdlive.co.za
Lagos-based Food Concepts plc, which counts Development Partners International and the IFC among its shareholders, is partnering with South Africa's Pioneer Foods in setting up Food Concepts Pioneer. Pioneer is investing $7 million for a 50.1% stake in the company with Food Concepts' shareholders retaining the balance of the shares. The deal gives Pioneer an asset in a key market for food companies looking for growth.
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Private Equity
Centum plans assets disposals to fund power, real estate deals
// reuters.com
James Mworia, the CEO of Centum Investment, tells Reuters that the investment company is planning to exit a number of stakes in companies in order to fund new investments in power, real estate and other areas. The firm is targeting new investments to help maintain the company's growth momentum, which, having risen 7-fold over the last 5 years, has been considerable.
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Policy, Regulation & Compliance...
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Legislative
Egypt's cabinet approves draft of long-awaited investment law
// reuters.com
Egypt's cabinet has given its approval for a long-awaited draft law aimed at creating a more efficient and welcoming environment for foreign investors in the country.
The government hopes that the move will minimize foreign business concerns before an investment conference later this month at which Egypt hopes to secure $12 billion in investment from domestic and international investors. The bill aims to reduce bureaucracy and make deals less vulnerable to legal disputes and changes in government. The draft bill will now be sent to Egypt's President, who is expected to ratify it.
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Policy
NIPC to foster environment to close $2.4tln infra deficit
// ventures-africa.com
Nigeria's Investment Promotion Commission is to be the linchpin in a new plan to help bridge the country's infrastructure investment deficit which is forecasted to be $2.4 trillion over the next 30 years. The Commission will coordinate with stakeholders and relevant government agencies to foster an investor-friendly environment to attract fresh domestic and international investment in the quickly expanding economy.
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Power
Africa's power shortages spell opportunity for Blackstone
// reuters.com
Africa's massive need for capital will see private equity playing more of a key role, according to Blackstone, who are focused on power generation and transmission infrastructure projects on the continent. The private capital investor's CEO, Steve Schwarzman, tells Reuters that, having developed electricity projects worth over $25 billion, the company's approach is to "stay in types of investments we are very comfortable, where there is an enormous demand for capital." Another critical component for any potential deals will be teaming up with local partners who provide the experience, relationships and knowledge essential for any project's success.
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Infrastructure
Atlas Mara plans mobile-banking push
// cnbc.com
As it continues its aggressive takeover and consolidation strategy in the financial services sector, Atlas Mara is planning a major push into mobile-banking in Africa. Ashish Thakkar, who co-founded the group with Bob Diamond in late 2013, tells CNBC that mobile money has become a "huge thing" in Africa and is currently being driven by the telecom operators. The opportunity for financial institutions and financial technology to take market share is considerable.
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DFIs
ICD inks private sector agreement with Afreximbank
// ventures-africa.com
The Islamic Corporation for Development, (ICD), the private sector arm of the Islamic Development Bank, has signed a cooperation agreement with the African Export-Import Bank to develop the private sector in ICD member countries in Africa. Among other things, the agreement covers potential cooperation on financing projects and opportunities in the construction, energy, manufacturing and leasing sectors.
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Exclusive reader offer...
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The 2015 Guide to sub-Saharan Private Equity
Reserve today for 30% savings with pre-publication price
Make sure you reserve your copy of AfCD's definitive guide to the private capital investors, funds and investment firms in sub-Saharan Africa. Once published in April, enjoy the following key benefits:
- For LPs; review SSA GPs, their strategies and their funds
- For GPs; find potential co-investors, plan secondary acquisitions and sales
- For Corporates; source assets for acquisition, targets for divestitures
- For Advisers; develop clients, transaction ideas and more
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Perspectives - Private Equity
Private Equity's evolution and development in Nigeria
// cnbcafrica.com
Synergy Capital's Akintoye Akindele talks to CNBC Africa about the evolution and development of private equity investment in Nigeria. He gives his perspective on the opportunities today, the trends he's seeing and what challenges still remain for the asset class in Nigeria today. Read more...
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Perspectives - Infrastructure
Narrowing infrastructure investment deficit begs financial innovation
// ft.com
In order to accelerate the pace of investment and close the yawning infrastructure deficit, Africa's needs call for new financing models and mechanisms to be understood. In this guest post for the Financial Times, Aubrey Hruby and Dawda Jawara spell out the challenges attracting finance for infrastructure developers and examine Afreximbank's trade finance investment model.
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Perspectives - Credit
West Africa's debt level management to be supported by growth
// reuters.com
Warnings to Africa's governments of the exchange-rate risk of taking on too much indebtedness have grown in volume in recent months. In a written response to Reuters, Tiemeko Meyliet Kobe, the Governor of West Africa's BCEAO central bank expressed the view that high growth rates in the countries of the Economic and Monetary Union of West Africa should ensure their debt profiles will remain sustainable.
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Companies, People & Profiles... |
Company News
Goldman alum set up merchant back to tap gas bonanza
// bloomberg.com
Two former employees of Goldman Sachs are part of the founding team behind ThirdWay Africa Partners, a new merchant bank in Mozambique, in a bet that the country's resource wealth will catapult it to the head of the continent's growth league tables. Rafael Sarandeses and Goncalo Neves-Correia are teaming up with Alejandro Tawil, a former partner with Oppenheimer & Co.
Read more...
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Company News
EFG-Hermes eyes sub-Saharan market expansion
// thenational.ae
Egypt's largest listed investment bank is considering expansion into sub-Saharan Africa. While the firm has no immediate plans, the region is of increasing interest due to the rising levels of uptapped demand for private equity and corporate advisory services from both domestic and international investors and corporations.
Read more...
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Profile
Village Capital launches fintech startup program
// afkinsider.com
As applications for startups competing for $100,000 in capital from venture lender Village Capital closed, AFK Insider talks to John Mulqueen and George Omeda about the venture lender's competition and the startup scene in East Africa.
Read more...
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CFO for leading investment firm
Based in Harare, Zimbabwe
Read more...
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Partner, Africa Investments at LeapFrog
Based in Johannesburg, South Africa
Read more...
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Investment Director for pan-African Private Equity fund
Based in London, UK
Read more...
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Private Equity Analyst for microfinance investor
Based in Cape Town, South Africa
Read more...
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Private Equity Analysts at Quantum Global
Based in Zug, Switzerland
Read more...
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Director, Portfolio Companies for global Private Equity firm
Based in Johannesburg, South Africa
Read more...
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Associate for Africa-focused Private Equity firm
Based in London, UK
Read more...
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Chief Investment Officer at Xterra Capital
Based in Port Louis, Mauritius
Read more...
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Regional Investment Director at GroFin
Based in Lagos, Nigeria
Read more...
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Regional Investment Director at GroFin
Based in Lagos, Nigeria
Read more...
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VP-level M&A Banker for Global Investment Bank
Based in Johannesburg, South Africa
Read more...
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Senior Associate at Helios Investment Partners
Based in London, UK
Read more...
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Investment Officer at PROPARCO
Based in Johannesburg, South Africa
Read more...
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Investment Analyst at Arkesden Partners
Based in Nairobi, Kenya
Read more...
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Africa Pensions & Sovereign Funds Investment Forum
New York, May 7th to May 8th, 2015
Read more...
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FT African Infrastructure Summit
London, March 10th, 2015
Read more...
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Wharton Club for Africa Investment Summit 2015
Nairobi, March 8th to March 10th, 2015
Read more...
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12th Annual AVCA Conference
London, April 27th to April 29th, 2015
Read more...
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Global Private Equity Conference
Washington, DC, May 11th to May 14th, 2015
Read more...
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Africa Financial Services Investment Conference
Brighton, May 12th to May 15th, 2015
Read more...
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CEO Infrastructure Investment Summit
Cape Town, June 3rd, 2015
Read more...
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We hope you found the digest to be a useful summary of the major happenings in Africa's private capital markets last week. We'd love it if you shared it with colleagues and business partners. They can sign up for free
here.
Best wishes for a productive week - if you have any tips, suggestions, questions or comments, please get in touch.
All the best,
- Allan
Allan Cunningham
Editor & Publisher
AfCD | Africa Capital Digest
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Rowayton, CT 06853, USA
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