The weekly roundup of Africa's Private Capital news
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P lease find the latest digest of the most noteworthy private equity, venture capital and infrastructure financing deal news and investment insight related to Africa that was published over the last week. 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 [email protected].
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This week's issue supported by...
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The week in brief...
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In an article on BusinessDay's BDLive website last week on how the mining sector's ongoing struggles will lead to private equity firms playing a greater role than traditional financing, author Allan Seccombe quotes Rajat Kahli, Standard Bank's Head of Global Mining and Metals, on his view that we're likely to see an uptick in Chinese investments in African commodities this year as prices bottom out, sparking a flurry of M&A activity in the sector. As if to underline that point, Chinese investment firm Heaven-Sent Capital made a cash offer of approximately $56 million to take one of the Johannesburg Stock Exchange's oldest mining listings, Village Main Reef, private. The cash bid represents a generous 46% premium over Village Main Reef's 30-day average share price. The deal is expect to close in May.
The Heaven-Sent deal was not the largest private equity transaction announced in Africa last week, however. That honor goes to an exit instead. Emerging markets private equity firm Actis has relinquished control of Globaleq Africa, earning $225 million in a sale to a partnership of two Development Finance Institutions, CDC and Norfund. Norfund is taking a 30% stake in the solar company for a consideration of $225 million, while CDC is converting the stake it holds in Globaleq through Actis's Infrastructure Fund 2 into a 70% direct interest in the company. The DFI partnership plans to bring more projects to the construction phase in sub-Saharan Africa, building an additional 5,000MW of generating capacity. The deal is expected to close in June.
A couple of other solar company financings also made news last week. Kenyan "pay-as-you-go" energy company M-KOPA Solar has landed a fourth round of funding in a $12.45 million deal lead by LGT Venture Philanthropy. The round attracted repeat investments from Lundin Foundation and Treehouse Investments, while Blue Haven Initiative participated for the first time. Meanwhile, the IFC and Cordiant Capital announced loans totaling $7 million to Tanzanian solar firm Off.Grid:Electric. The IFC is providing $4.5 million of the loan, with the balance being provided by Cordiant. The funds will be used to expand the company's services and help it achieve its goal of reaching 200,000 Tanzanian households by the end of the year.
In fundraising news, Momentum GIM announced that it has successfully closed the first tranche of its Africa Real Estate Fund with $50 million of institution, family office and high net worth investor capital. The fund has a fund raising target of $250 million for its final close in June this year. The fund will work with Eris Property Group and make investments in retail, commercial and light industrial real estate developments, providing investors access to Africa's strong economic growth and emerging consumer sector.
As with each week, we found a number of interesting and useful perspective pieces last week. KPMG published a succinct summary of the key factors private equity investors should consider when planning and preparing for exits in Africa. Juergen Braunstein of The London School of Economics penned a piece for the Financial Times on why Sovereign Wealth Funds shy away from investments in Africa and makes some suggestions about how their capital can be mobilized to help close the infrastructure gap in Africa. And Teodoro Poulson of FACRA, Angola's government-backed venture capital fund, looks at the changing venture capital model given the peculiarities of doing deals on the continent.
You can review these and other stories by scrolling down and reviewing the headlines, abstracts and links.
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Power
Norfund & CDC buy Globaleq from Actis and others // theafricareport.com
The two Development Finance Institutions are teaming up to buy Globaleq Africa from private equity firm Actis and the energy company's minority shareholders. According to a press release on CDC's website, Norfund will pay Actis $225 million in cash for a 30% stake, while CDC will convert the stake it holds through Actis Infrastructure Fund 2 into a 70% direct interest in the company. The partners plan to bring more projects to the construction phase in sub-Saharan Africa, building an additional 5,000MW of generating capacity. The deal is expected to close in June.
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Private Equity
Heaven-Sent Capital in $56mln Village Main Reef take private // bdlive.co.za
Chinese private equity firm Heaven-Sent Capital has offered $56 million to take Village Main Reef, one of the JSE's oldest mining listings, private. BusinessDay reports that it's understood that Heaven-Sent, who manage $3.2 billion in assets, will use the acquisition as a springboard for further expansion in Southern Africa. The cash offer represents a 46% premium over Village Main Reef's 30-day average share price. The deal is expected to close in May.
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Private Equity
One Thousand & One Voices backs raisin business RedSun // campdenfb.com
Private equity firm One Thousand & One Voices is making a $6 million investment in RedSun Dried Fruit & Nuts, one of South Africa's largest raisin producers. The capital will be used to double the size of its workforce and expand its processing facilities. The investment is the private equity firm's first in the agribusiness processing and distribution business, a sector that is expected to continue to grow significantly.
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Private Equity
Qalaa exits Pharos stake in $4mln management buyout // zawya.com
In the latest move in their strategy to divest all non-core assets in their portfolio, Qalaa Holdings is selling its 80% stake in Egyptian investment bank Pharos in full to a group of investors led by the bank's founder and current chairman, Dr. Mohamed Taymour. The deal values Pharos at 40 million Egyptian pounds, or $5.24 million.
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Private Equity
Centaur acquires De Roodepoort coal prospecting rights // worldcoal.com
Global investment company Centaur Holdings has acquired prospecting rights for the De Roodepoort coal project in South Africa. The purchase price was not disclosed, but the terms of the deal also include a market-related quarterly royalty payment for each tonne of coal mined. World Coal reports that De Roodepoort is estimated to have in situ reserves of 54 million tonnes of coal and a life of mine of more than 25 years.
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Venture Capital
LGT Ventures backs M-KOPA Solar with $12.45mln // disrupt-africa.com
Pay-as-you-go energy company M-KOPA Solar has landed a fourth round of funding in a $12.45.million deal lead by LGT Venture Philanthropy. Other investors participating in the deal include Blue Haven Initiative, Lundin Foundation and Treehouse Investments. The startup's last round of funding was in December 2013, when it raised $20 million.
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Venture Capital
IFC, Cordiant make $7mln in loans to Off.Grid:Electric // pv-magazine.com
The International Finance Corporation and Cordiant Capital made loans totalling $7 million to Tanzanian solar firm Off.Grid:Electric. The IFC is providing $4.5 million of the loan, with the balance being provided by Cordiant. The funds will be used to expand the company's services and help it achieve its plan to reach 200,000 Tanzanian households by the end of the year.
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Venture Capital
C5 Capital backs Parcelninja with $1.7mln // disrupt-africa.com
E-Commerce startup Parcelninja has raised $1.7 million from C5 Holdings, the parent company of fund manager, C5 Capital. The capital will be used to grow the startup's operations and help expand the client base of online retailers for its cloud based warehousing and delivery solutions.
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Norfund pays Actis $225 million for a 30% stake in Globaleq Africa
Image Credit: Globaleq
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Infrastructure
Egypt mulls contribution level to Africa50 Fund // zawya.com
Egypt's government is planning to contribute to the African Development Bank-led Africa50 Infrastructure fund but is yet to determine how much capital it will risk. The fund has an initial fundraising goal of $3 billion, with aims to grow to $10 billion. Discussions with governmental and financial institutions have been taking place since the fund was announced in 2014, and commitments totaling 25% to 30% of the initial capital are expected to be announced within the next few weeks.
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PERE
Momentum holds first close for Africa Real Estate fund // ftseglobalmarkets.com
Investment manager Momentum GIM has held a first close of $50 million for its planned $250 million Africa Real Estate fund. The fund has drawn commitments from a mix of institutions, family offices and high net worth individuals. The fund will focus on the development of retail, commercial and light industrial real estate in sub-Saharan Africa outside of South Africa, offering investors exposure to Africa's emerging consumer. It anticipates holding the final close for the fund in June 2015.
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Venture Capital
Orange earmarks $22.4mln for first Digital Ventures fund // disrupt-africa.com
Telecom firm Orange has announced plans for Orange Digital Ventures, an early stage investment program which will invest in and support technology, communications and digital services startups. The firm is committing $22.4 million in capital to the fund, which will target companies in the 17 countries in which Orange already has a presence.
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Credit
Oil price slump forces Angola to tap credit markets // ft.com
Angola is reportedly looking for $1 billion in loans from the World Bank and international lenders as the slump in oil prices bites into the country's revenues. The Financial Times reports that the country has already approached Goldman Sachs and Gemcorp International seeking $250 million from each. Oil accounts for 98% of Angola's export earnings, more than two thirds of government revenues and 44% of the country's GDP.
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Projects & Portfolio Companies...
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Private Equity
Virgin Active to list on the Johannesburg Stock Exchange // cityam.com
CVC Capital-backed gym chain Virgin Active has appointed banks to work on its planned public listing. The timing of the offering has not been finalized, but the presence of Standard Bank among the advisers points to the IPO taking place on the Johannesburg Stock Exchange. CVC Capital Partners holds a 51% stake in the company, while Virgin Group owns approximately 45% of the business.
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Private Equity
Coast2Coast's Bounty Brands on pre-IPO acquisition trail // iol.co.za
According to Business News, Coast2Coast's FMCG platform company, Bounty Brands, has 3 potential bolt-on acquisitions in the pipeline which, if executed will create a group with 20% margins on approximately $87 million in revenue. Last year, the group spent about $43 million buying Chappers Sports Direct, Cosmetix and Table Charm. The group plans to grow its revenues and profits five-fold before seeking a public listing in three years' time.
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 The 2015 Guide to sub-Saharan Private Equity Make sure you reserve your copy of AfCD's definitive guide to the private capital investors, funds and investment firms in sub-Saharan Africa. 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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Mining
Mining company struggles tempting cash-rich private equity? // bdlive.co.za
As mining companies get ready to wrestle with another tough year of low commodity prices, analysts expect to see an uptick in acquisitions of undervalued mining assets by private equity firms flush with cash. Levels of investments from Chinese firms and funds in particular could rise, following the sharp declines from their peaks in 2011.
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Renewables
Making renewable energy an African reality // afkinsider.com
A review of the renewable energy market in Africa which can be broadly split into two categories; utility-level projects and those that are small and more widely distributed. Each technology has its own particular set of financing requirements and dedicated pool of lenders. As well as being environmentally friendly, renewable energy might also just be the most economical way to electrify the continent.
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Perspectives - Private Equity
Getting Private Equity exits in Africa right // kpmg.com
A succinct summary from KPMG of some of the key factors and strategies private equity investors should consider and focus on when planning and preparing for an exit in Africa.
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Perspectives - Infrastructure
Mobilizing Sovereign Wealth Funds to make African investments // ft.com
A look at the current levels of engagement the world's Sovereign Wealth Funds have with African infrastructure opportunities and some of the reasons why it is not higher. Funding Africa's annual infrastructure gap is well within the reach of SWFs, but a combination of fund mandates and underdeveloped capital markets are significant hindrances to their greater participation. However, with some changes, capital from SWFs might be mobilized to make more African investments.
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Perspectives - Venture Capital
Africa's Venture Capital model is changing // ventures-africa.com
A guest column by Teodoro Poulson, an Investment Committee Member of Angola's $250 million state venture capital fund, on how the traditional VC model can be less effective for both investors and the companies in which they invest. He explains why partnering with government backed-funds may be the best solution for investors seeking to enter the sub-Saharan venture capital market and companies seeking capital.
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Perspectives - Venture Capital
The age of Africa's VCs dawns // disrupt-africa.com
A summary of recent investment initiatives and other positive developments in Africa's venture capital scene which seems to point to the dawning of a new age for Africa's venture capitalists.
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| Companies, People & Profiles... |
Profile
South African incubator, Springlab // bdlive.co.za
A profile of Springlab, the South African technology incubator, joint venture partner and business development company founded in 2013 by Sheraan Amod and Eugen Petersen. An interesting piece in which they explain their philosophy and approach to investing in and building the companies they co-found with entrepreneurs.
Read more...
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Company News
I&P opens new office in Accra // ietp.com
Investisseurs & Partenaires has announced the opening of a new office in Accra, its first in anglophone Africa. According to the press release, the SME investment company plans to make four or five new investments in Ghana from the I&P Afrique Entrepreneur fund by 2017. The new office will be headed by Investment Manager, Baafour Otu-Boateng.
Read more...
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Company News
TVM Capital Healthcare opens offices in Boston and Beirut // tradearabia.com
The MENA-focused specialist private equity firm has opened offices in Boston and Beirut in order to strengthen relationships with healthcare providers and boost its research function. Dr. Nadeem Alduaj joins as a Physician Advisor in the Boston office and Ghida Harfouche has been appointed to head up the research function in Beirut.
Read more...
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Company News
Vukile Property Fund takes control of Synergy // bdlive.co.za
Listed property fund Vukile Property has gained majority control of small-cap retail fund Synergy Property Fund following significant take-up last week of its offer to acquire the Synergy shares that it did not already own.
Read more...
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Company News
Rand Merchant Bank to open Ghanaian office // ventures-africa.com
According to reports, Rand Merchant Bank, a division of First Rand Bank, will expand its presence to Ghana by June 2015. According to First Rand, all the necessary permits required to start commercial operations have been secured from The Bank of Ghana.
Read more...
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Private Equity Analyst at African Capital Alliance
Based in Lagos, Nigeria
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PERE Associate at African Capital Alliance
Based in Lagos, Nigeria
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Managing Director for African Private Equity firm
Based in Nairobi, Kenya
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Managing Director for African Private Equity firm
Based in Johannesburg, South Africa
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Deal Lead for Renewable Energy Investing at Google
Based in Mountain View, CA, USA
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Manager for MENA-focused Private Equity office
Based in Riyadh, Saudi Arabia
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MD/EVP for prominent Private Equity firm
Based in Abu Dhabi, UAE
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Private Equity VP for Quantum Global
Based in Zug, Switzerland
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Executive Director, Financial Services for AFC
Based in Lagos, Nigeria
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Senior Associate, Infrastructure and Real Assets
Based in Zug, Switzerland
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Investment Director for pan-African Private Equity fund
Based in London, UK
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Investment Professional for Global Buyout fund
Based in Nairobi, Kenya
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Deal originators for successful South African fund
Based in Mombasa, Kenya
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Investing in African Mining Indaba
Cape Town, February 9th to February 12th, 2015
Read more...
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2015 SAVCA Annual Private Equity Conference
Stellenbosch, February 12th to February 13th, 2015
Read more...
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South African Impact Investing Conference
Johannesburg, February 16th to February 17th, 2015
Read more...
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17th Annual Africa Business Conference
Cambridge, USA, February 27th to March 1st, 2015
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2nd Annual Infrastructure Project Financing Africa
Cape Town, March 2nd to March 4th, 2015
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12th Annual AVCA Conference
London, April 27th to April 29th, 2015
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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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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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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Africa Capital Digest is a product of Rowayton Press
Rowayton, CT 06853, USA
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