March 2, 2015 
The weekly roundup of Africa's Private Capital news


 

Please find the latest digest of the most noteworthy, and we hope interesting, private equity, venture capital and infrastructure financing deal news and information published last week related to Africa.  Feel free to share it with interested colleagues and/or partners.  If they would like to receive their own weekly copy, they're more than welcome to sign up here.  
 
As ever, if you'd like to get in touch or share any tips or comments, please contact me at acunningham@africacapitaldigest.com.

This week's issue supported by...            
TMT M&A Mkting barter
The week in  brief...

Two private equity deals involving Mauritius-based companies made the headlines in Africa last week.  In the first, LeapFrog Partners wrote a $25 million check from their recently raised, $400 million second fund to take a stake in AFB Mauritius, a financial technology company.  Operating under the brand "afb", the company offers consumers mobile-phone access to insurance, credit and savings products and by partnering with mobile operators and over 400 retail outlets, it services over one million people in several countries including Kenya, Ghana and Zambia.  Mobile and retail telephony is exploding across sub-Saharan Africa and rapidly outstripping traditional banking channels, making a compelling rationale for the deal.


 
In the second financial services sector deal, Amethis Finance announced that it is investing approximately $19 million for a 17% stake in Ciel Finance, the newly-created banking and financial services arm of Ciel Group, one of Mauritius's leading diversified family businesses.  According to the press release, the two companies expect Amethis's stake to increase to 24.9% later in 2015, following the planned transfer of Madagascar's second largest bank, BNI, from Ciel Group toCiel Finance once regulatory approval has been granted.


 
In another financial services sector deal, private equity firm 8 Miles has acquired Keystone Bank's 42% stake in Orient Bank, a medium-sized commercial bank in Uganda.   Deal valuation and terms were not reported.  According to 8 Miles Partner Hemen Shah, the country's growing economy and underbanked population made for an attractive investment opportunity.  Meanwhile across the border in Kenya, Phatisa's Pan African Housing Fund, (PAHF), is partnering with Africa Reit and investing $3 million in a residential housing development in the Karen-Langa'ta suburb of Nairobi.  The development will help satisfy demand for affordable housing from young adults in an area of acute residential shortage.


 
Former Egyptian private equity firm-turned-investment holding company Qalaa Holdings continues its process of reorganization.  Last week it announced that it is planning to raise $222.4 million through a rights issue to allow it to further expand its stakes in the subsidiaries it plans to retain. Over the last few weeks it has either mulled the disposal of some portfolio assets or exited others as it implements its plan to refocus on this core activities. The company says it expects to return to profitability later this year.


 
Ascent Capital Africa landed a new investor for their Rift Valley Fund last week.  Kenya's Nation Media Group's staff pension fund is committing $1 million to the projected $60 million fund.  What's notable about the news is that it marks one of the rare occasions where local pension funds make an allocation to the private equity asset class.  The Rift Valley Fund which targets investments in the East African region held its first close at $50 million in 2014.


 
Investor interest in sub-Saharan sovereign debt is still showing significant strength.  Last week's $1 billion bond issue from Cote d'Ivoire received $4 billion in orders.  The bonds will have an average maturity of 12 years and yield 6.625%.  The issue is the country's second dollar-denominated bond since it defaulted on its debt in 2011 as it became embroiled in civil war.  As we mentioned last week, a number of other African countries are lining up to tap the international debt markets.  With all the warnings for both country governments and investors about the risks around rising indebtedness, Cote d'Ivoire's success will be encouraging to them.  


 
There were a number of other interesting articles and opinion pieces last week.  One of the world's largest Free Trade Areas looks set to get its start in 2017 with the proposed combination of four sub-Saharan regional trading blocs.  The area will integrate a market of 26 countries with more than 600 million people, representing some 58% of Africa's total GDP.  In other news, the oil price slump is crimping Africa's sovereign wealth fund development and, in Angola's case, forcing them to look at diversifying their asset base to boost returns.  


 
And finally, some interesting content from a couple of regional private equity and venture capital associations; AVCA's published a private equity data tracker providing us with a snapshot of private equity activity in Africa from 2007 to 2014.  It showcases the volume and value of deals continent-wide, as well as by individual sector. And SAVCA has posted some video content from its annual conference held in Stellenbosch in mid-February. It's a good opportunity to get some insight into the investment thoughts and directions of some of the delegates who were in attendance.


You can review these and other stories by 
scrolling down and reviewing the headlines, abstracts and links. 
Deal News...
Private Equity
LeapFrog spends $25mln for minority stake in AFB // bloomberg.com
Specialist financial services private equity investor LeapFrog Partners is investing $25 million to take a minority stake in financial technology company AFB Mauritius, who promote their services to consumers under the "afb" brand.  Precise terms of the deal have not been disclosed.  The deal represents LeapFrog's fourth investment from its $400 million Fund II, which closed in the last quarter of 2014.
Private Equity
Amethis makes $19mln investment in Ciel Finance // africamoney.info

Amethis Finance is spending approximately $19 million to take a 17.1% stake in Ciel Finance, the newly created banking and financial services arm of Ciel Group, one of Mauritius's leading diversified family businesses.  According to the press release, the two companies expect Amethis's stake to increase to 24.9% later in 2015, following the planned transfer of BNI Madagascar from Ciel Group to Ciel Finance.  The partnership allows the two companies to pool best practices and regional relationships to expand Ciel Finance's footprint in sub-Saharan Africa and the Indian Ocean region.

Private Equity
8 Miles takes 42% stake in Uganda's Orient Bank  // theafricareport.com

Private Equity firm 8 Miles has acquired a 42% stake in Orient Bank from Nigeria's Keystone Bank.  The investment in the Ugandan commercial bank gives 8 Miles exposure to significant growth in a quickly expanding but underbanked economy.  The terms and value of the deal were not reported.

Private Equity
Phatisa invests $3mln in Kenyan residential development // the-star.co.ke

In a $3 million deal, Phatisa's Pan African Housing Fund is teaming up with Africa Reit to develop a 6-acre site for residential housing in the Karen-Langa'ta suburb of Nairobi.  Once completed, the development will provide affordable, good quality accommodation for up to 1,400 young adults in an area of acute housing shortage.

Venture Capital
Online Retailer DealDey lands $5mln from Kinnevik // disrupt-africa.com
Swedish investment company Investment AB Kinnevik is investing $5 million in start-up DealDey. The capital will allow the Nigerian online retailer to expand its offering across Nigeria, as well as Ghana and other countries, on its way to becoming a leading competitor to better-known firms such as Jumia and Konga across sub-Saharan Africa.

Maluti Communications
Marc-Emmanuel Vives, CEO of Ciel Finance in which Amethis Finance took a 17% stake last week
Image Credit: Maluti Communications
Fund & Financing News...
Private Equity
Qalaa Holdings planning a $222mln rights issue // businessdailyafrica.com

Egyptian Investment Company Qalaa Holdings is planning to hold a rights offering to raise $222.4 million.  The additional funds will be used to further expand its stakes in the subsidiaries it plans to retain as it continues its reorganization and divestiture program to better focus on its core holdings.  The company says it will return to profitability later this year, ending years of losses.  

Read more...

Private Equity
Nation Media Group's retirement scheme commits $1mln to ARVF // altassets.net

The Staff Retirement Benefits Scheme of Kenya's Nations Media Group is committing $1 million to Ascent Capital's Rift Valley Fund through its fund manager, STANLIB Kenya.  Ascent Capital is targeting $60 million for the fund, and held its first close at $50 million last year.  The latest commitment cements Ascent's position as one of the few private equity funds to successfully win investment from local pension funds.  

Read more...

Credit
Cote d'Ivoire's $1bln bond sale heavily oversubscribed // wsj.com

In another sign that investor appetite for higher-yielding sub-Saharan sovereign debt shows no sign of waning, last week's $1 billion bond sale by Cote d'Ivoire attracted over $4 billion in orders.  The bonds will have an average maturity of 12 years and yield 6.625%.  The issue is the country's second dollar-denominated bond since it defaulted on its debt in as it became embroiled in civil war.

Credit
EBRD approves Euro 200mln loans for Tunisian projects  // theafricareport.com

The European Bank of Reconstruction and Development will lend Tunisia 200 million euros this year to help finance planned industry and energy projects.  According to EBRD official Anis El Fahem, the funding will be used to finance 14 planned projects.  To date, the bank has already financed 20 projects with 210 million euros since 2012.

TMT MENA 2015
Regulation & Compliance...
Legislative
Proposed alliance creates continental Free Trade Area in 2017 // dailynews.co.tz

Four regional trading blocs have agreed to setup a single sub-Saharan Free Trade Area in 2017 The East African Community, (EAC), the Southern African Development Community, (SADC), the Common Market for Eastern and Southern Africa, (COMESA), and the Economic Community of Western African States, (ECOWAS), will all combine to establish an integrated market of 26 countries with a population of 600 million people.  The huge Free Trading Area will represents a market of approximately 57% of the population of the African Union with a combined GDP of $1 trillion, almost 58% of the GDP of the whole continent. 

Taxation
Tax collection shift postpones Kenya's CGT implementation // allafrica.com

Kenya's Treasury and Revenue Authority have decided to put the onus on paying the re-introduced 5% capital gains tax on investors rather than stockbrokers as originally planned.  As a result, the implementation of the tax has been delayed until the requisite amendment to the Tax Act can be made,  The amendment can only be made in the next financial year, which begins in July 2015. Until then, the tax will not be levied.

Sectors & Strategies...
Agriculture
Countries offering agricultural investors most opportunity // ventures-africa.com

Africa's agriculture sector has always struggled to attract financing and investment, but this may be slowly changing as private equity firms and banks come round to the opportunities offered by the space.  A look at five countries which could offer significant opportunity for the investor in agriculture businesses.

Infrastructure
Is Africa's Infrastructure development boom sustainable?  // economist.com

After decades of underinvestment, capital is flooding into the development ports, railways, roads and other infrastructure projects in Africa from both the private and public sectors.  While opportunities abound, risks still remain, however, including the slow pace of reform, falling commodity prices and increasing country indebtedness.

Sovereign Wealth Funds
Angola's SWF hunts for assets to diversify base  // bloomberg.com
In a bid to diversify its assets and boost returns, Angola's $5 billion Sovereign Wealth Fund is looking for potential investments in mining, timber, health and agriculture.  However, the slump in the price of oil and resulting budget cuts may constrain the government's ability to approve additional allocations to the fund.
Venture Capital
Investors back Africa's start-ups with $27mln through VC4Africa  // forbes.com
Since its founding in 2008, angel investors and venture capitalists have backed startups with $27 million through VC4Africa, the online network and community of entrepreneurs and investors building businesses on the continent.  An interview with founder Ben Price on the vision behind the network, the growth of the community to date and how entrepreneurs and investors connect to do deals.
Exclusive reader offer...            
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
  Contact Teresa Hall at thall@africacapitaldigest.com to reserve your copy today.

Trends & Perspectives...
Trends - Private Equity
Private Equity Data Tracker published by AVCA  // avca-africa.org

A snapshot of private equity activity in Africa from 2007 to 2014, showcasing the volume and value of deals continent-wide, as well as by individual sector.  A useful summary, which highlights some of the bigger funds raised and deals done last year, with the trend pointing to more growth for the asset class in 2015.  

Read more...

Perspectives - Private Equity
Investor perspectives from SAVCA's annual conference  // youtube.com

Some interesting video perspective produced at the South African Venture Capital Association's annual conference has now been posted in the association's YouTube channel.  An opportunity to get some insight into the investment thoughts and directions of some of the attendees at this year's conference which took place in Stellenbosch in mid-February.  

Read more...

Perspectives - Sovereign Wealth
Africa's young SWFs will struggle to deliver as oil price languishes  // ft.com

In a guest post for the Financial Times, Ryan Olson of The Heritage Foundation looks at the impact of the oil price slump on the ability of some of sub-Saharan Africa's Sovereign Wealth Funds to deliver hoped-for benefits.   He looks at the implications of the missed opportunity and what it means for the pace of infrastructure development and government reform on the continent.  

Perspectives - Venture Capital
Why the Silicon Savannah looks set to become Africa's tech hub  // mgafrica.com

Having pioneered a mobile technology economy, Kenya is well-positioned to consolidate its position as the leading technology hub on the continent.  A strong perspective on how the country has established this position over the last ten years, a brief exploration of some of the most recent developments as well as an outlook for the future.  

Companies, People & Profiles...
Profile
Venture Capitalist Justin Stanford, 4Di Capital's founder // disrupt-africa.com

An interview with venture capitalist Justin Stanford, founder of 4Di Capital, on how he came to found the fund, its focus today and how it builds value in the investee companies in its portfolio

Read more...

Profile
Ascent Capital Africa focuses on Ethiopia // addisstandard.com

A Q&A piece with Michael Selassie, head of Ascent Capital's newly-opened office in Addis Ababa, and fund partner Guy Brennan on the firm's strategy for its Rift Valley Fund in Ethiopia.  From sector targets to investment criteria, they discuss what they're looking for in potential investments. 

Read more...

Profile
Mkoba looks to push Tanzania's businesses // howwemadeitinafrica.com
Jitesh Ladwa, the CEO of the $200 million Mkoba Private Equity fund, one of Tanzania's first indigenous private equity investment vehicles talks to How we made it in Africa on where he sees opportunity in Tanzania and the broader region. 
People News
An review of some of the candidates to head the AfDB  // natlawreview.com

In an article published in the National Law Review, Covington & Burling's Mipe Okunseinde and Earl Gast look at the background of some of the potential candidates to replace African Development Bank's Donald Kaberuka when his term as President of the Bank ends in August this year.

Read more...

Company News
AfrAsia closes financially distressed Zimbabwe operation  // reuters.com

AfrAsia Bank is closing its struggling Zimbabwean unit after failing to attract a fresh injection of capital.  The country's struggling economy has compounded the ability of customers to repay their loans, creating liquidity and solvency problems for some of the smaller banks.

Read more...

Current Job Postings...
Highlighted Jobs...            
CFO for leading investment firm 

Based in Harare, Zimbabwe

Read more...

Partner, Africa Investments at LeapFrog 

Based in Johannesburg, South Africa

Read more...

Deal Lead for Renewable Energy Investing at Google 

Based in Mountain View, CA, USA

Read more...

Investment Director for pan-African Private Equity fund 

Based in London, UK

Read more...

Director, TAS at EY 

Based in Cairo, Egypt

Read more...

Investment Analyst at Arkesden Private Equity 

Based in Johannesburg, South Africa

Read more...

Private Equity Analyst for microfinance investor  

Based in Cape Town, South Africa

Read more...

Private Equity Analysts at Quantum Global 

Based in Zug, Switzerland

Read more...

New to AfCD this week
Senior M&A Banker for top tier Investment Bank 

Based in Johannesburg, South Africa

Read more...

Director, Portfolio Companies for global Private Equity firm 

Based in Johannesburg, South Africa

Read more...

Associate for Africa-focused Private Equity firm 

Based in London, UK

Read more...

Upcoming Conferences...
Highlighted Event...            
Powering East Africa 

Nairobi, March 25th to March 27th, 2015 

Read more...

2nd Annual Infrastructure Project Financing Africa 

Cape Town, March 2nd to March 4th, 2015 

Read more...

Somali Investment Forum 

Nairobi, March 8th to March 10th, 2015 

Read more...

FT African Infrastructure Summit  

London, March 10th, 2015 

Read more...

Wharton Club for Africa Investment Summit 2015 

Nairobi, March 8th to March 10th, 2015 

Read more...

TMT M&A Forum 2015 

London, March 19th, 2015 

Read more...

Africa GRI 2015 

Johannesburg, April 21st to April 22nd, 2015 

Read more...

TMT MENA 2015 

Dubai, April 22nd, 2015 

Read more...

12th Annual AVCA Conference 

London, April 27th to April 29th, 2015 

Read more...

Africa Pensions & Sovereign Funds Investment Forum 

New York, May 7th to May 8th, 2015 

Read more...

Global Private Equity Conference 

Washington, DC, May 11th to May 14th, 2015 

Read more...

Africa Financial Services Investment Conference 

Brighton, May 12th to May 15th, 2015 

Read more...

And finally...
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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