February 16, 2015 
The weekly roundup of Africa's Private Capital news


 

Please 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 acunningham@africacapitaldigest.com.

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

It was a relatively quiet week on the deal front last week in Africa's private capital markets. Perhaps that was due to the fact that there were a couple of major distractions for investors last week, namely two important conferences in Cape Town.


 

Firstly, there was that annual fixture, the Investing in Africa Mining Indaba which reportedly had some 7,000 delegates in attendance. It's likely that private capital investors were well-represented in the crowd. With commodity prices hitting 10-year lows, valuations are very attractive to private equity investors who've been biding their time. Look to see them doing a number of deals in the sector in the coming year. The second distraction was happening in Stellenbosch; the South African Venture Capital Association's annual get together which is a must attend for many in the private capital investing ecosystem.

 

Of the deals that were announced, all were in the consumer sector. Nedbank Capital took a 33% stake in GloCell, the $430 million South African cellular telecoms company. The terms of the deal were not disclosed. Nedbank was attracted by GloCell's market leadership position and its growth potential and the capital is expected to be used to help the company further expand its market reach.

 

In a first, Ascent Capital made a $2.5 million investment to take a 50% stake n Ethiopian medical diagnostics play Medpharm Holdings. This is the debut investment being made from Ascent's Africa Rift Valley Fund. The funds will be used to build a state-of-the-art pathology lab, broaden the range of diagnostic tests available and expand its services to the broader East African region. Meanwhile, Kenyan remittance payments startup BitPesa landed a $1.1 million second round from a group of investors led by San Francisco-based Pantera Capital. As part of the deal, Pantera's CEO Dan Morehead will take a seat on BitPesa's board.

 

A number of interesting perspective pieces were published last week. The mounting concern around the foreign exchange risk the appreciating US dollar poses to Africa's sovereign debt markets is examined by Amadou Sy of The Brookings Institution. He examines the Overseas Development Institute's recent report and concludes that it is not time to worry...yet. In a separate piece, Development Partner International's Co-Founder Runa Alam tells Institutional Investor where the private equity opportunity in Africa stands today and which sectors hold strong appeal. And at the Mining Indaba, panelist Robert Hersov shared his view with the audience that a "tsunami" of US capital is building, soon to wash up on Africa's shores.

 

You can review these and other stories by scrolling down and reviewing the headlines, abstracts and links. 

Deal News...
Private Equity
Nedbank Capital takes 33% stake in GloCell // techcentral.co.za
Nedbank Capital is paying an undisclosed amount to take a 32.9% stake in mobile company GloCell, one of South Africa's largest distributors of pre-paid cellular airtime. According to GloCell's CEO, Alessandro Mariola, the deal will allow the company to further develop its reach and value proposition.
Private Equity
Sekunjalo and others back newly-formed ANA with $20mln // iol.co.za

Leading african investors have teamed up to back African News Agency, (ANA), the continent's first syndicated news service, with an initial investment of $20 million.  Iqbal Surve, executive chairman of Sekunjalo Investments and Ladislas Agbesi, executive chairman of the Pan African Business Forum are among those behind the formation of the agency.  ANA is expected to launch at the beginning of March, and will fill the void left by the liquidation of the South Africa Press Association, (SAPA) at the end of the first quarter.

Private Equity
Ascent spends $2.5mln for 50% stake in MedPharm // ascent-africa.com
In debut deal for their African Rift Valley Fund, Ascent Capital is investing $2.5 million for a 50% stake in Ethiopian medical diagnostics company Medpharm Holdings. The new capital will allow the company to create a world-class pathology laboratory and expand the range of tests it makes available.  The funding will also allow the company to take advantage of Ethiopian Airlines' regional network to extend is service offerings to the broader East African community.
Venture Capital
Pantera Capital leads $1.1mln second round in BitPesa // wsj.com

San Francisco-based Pantera Capital has led a $1.1 million second round in Kenyan remittance payments startup BitPesa.  Other investors include Crypto Currency Partners, Stephens Investment Management, Bitcoin Opportunity Corp. and Future/Perfect Ventures.  Pantera's CEO Dan Morehead takes a seat on the board. To date the company has raised $1.7 million.


Nedbank's investment in cellular provider GloCell will help the firm expand its market reach
Image Credit: Memeburn        
Fund & Financing News...
DFI
IFC and GAFSP invest $9.2mln in program with KCB Bank Rwanda // ifc.org
The IFC and the Global Agricultural Food and Security Program will invest $9.2 million in a program with KCB Rwanda to help farming cooperatives gain access to the finance and training required to expand food production in the country.  The bank's loans will provide farmers with working capital for land preparation, seeds, fertilizers as well as help with weeding and harvesting.
Venture Capital
Kenya's ICTA launches $1.2mln fund for tech startups // ventureburn.com
Kenya's Information Communication Technology Authority has signed a 3-year funding agreement worth $1.2 million with the Netherlands Trust Fund to help Kenya's ICT startups and SMEs enhance their export competitiveness.  The program is expected to support 33 Kenyan startups.
Projects & Portfolio Companies...
Private Equity
ACE & Co. on recent exit from Moulin d'Or // emeafinance.com

Having exited its stake in Tunisian baked goods company Moulin d'Or in late January, ACE & Co. partner Chris Kile reviews the company in which they made their first investment in 2012. 

Venture Capital
Nomanini likely to raise another found in 2015 for expansion // disrupt-africa.com

South African mobile point-of-sale provider Nomanini looks set to return for another round of funding in 2015.  The Rockbridge Investments-backed company is looking to accelerate its expansion across other African countries.  To date, the company has raised a total  $2.3 million. 

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.

Sectors & Strategies...
eCommerce
Online retail tailored to Africa's markets // reuters.com
As Africa's middle class increasingly demand products that conventional retailers fail to offer, significant opportunity exists for online retailers who tailor their offering to African markets.  With products from retailers Amazon and Alibaba often being out of the continent's consumers' reach, African online retailing startups have started to appear to service the market.
Mining
Mining finance market to remain challenging through 2015 // mineweb.com
While good investment opportunities do exist in mining today, 2015 will remain challenging for those projects which got their start when funding was more freely available.  The decline in commodity prices and the lack of reasonable returns will keep investors' hands in their pockets.  Despite this bleak short- to medium-term picture, good deals will be available to projects that are low on the cost curve in relation to their peers.
Power
More public-private teaming needed to close power gap // bignewsnetwork.com
While Power Africa has attracted more then $20 billion from private sector investment in electricity projects, there is still a huge need tor additional private and public investment to help close the power gap on the continent.  Governments need to ensure appropriate laws, regulations and initiatives are in place to encourage the private sector involvement required to build capacity.
Oil & Gas
Falling oil price puts pressure of East African E&P projects // ft.com
Still undeveloped due to a lack of transport infrastructure and human capital expertise, East Africa's nascent oil and gas industry looks like it will have to wait until the price of crude bounces back before it can start production.  The delay is a blow to regional governments who were looking at the expected revenues to help boost budgets and fund multi-billion dollar infrastructure projects.
Trends & Perspectives...
Perspectives - Credit
Assessing foreign exchange risk for Africa's sovereign bonds // brookings.edu
A piece by Amadou Sy of The Brookings Institution's Africa Growth Initiative assessing how much riskier African sovereign debt has become as a consequence of the strengthening US dollar.
Perspectives - Private Equity
DPI's Runa Alam on opportunity and risk in Africa // institutionalinvestor.com

Runa Alam, Co-Founder of leading private equity firm Development Partners International, tells Institutional Investor why Africa is still attractive as an emerging market investment destination, what risks are involved and which sectors she sees as offering particularly compelling investment opportunities.  

Read more...

Perspectives - Private Equity
Metals slump an opportunity for rifle-shot private equity deals // bloomberg.com
With commodity prices languishing at their lowest levels in a decade, 2015 could be the year that witnesses a splurge of deals globally from mining-focused private equity firms who are sitting on about $12 billion in dry powder, according to data from Bloomberg Intelligence.   Valuations will be very attractive.  Denham Capital's Bert Koth tells Bloomberg that low prices have "...crystallized...what is a viable opportunity and what is not a viable opportunity."
Perspectives - Private Equity
Flood of US Capital on horizon for Africa // howwemadeitinafrica.com
Improving business and regulatory climates as well as the start of a track record of successful investments and partnerships have led to the perceived risk of investing in Africa being significantly lowered.  Robert Hersov, founder of Invest Africa told a panel at last week's Mining Indaba in Cape Town that a tsunami of US capital is building to take advantage of the rewards Africa has to offer.
Perspectives - Private Equity
Investors urge governments to foster economic certainty // miningweekly.com
Mining-focused global investment firms are calling for Africa's government to foster a climate of economic certainty in order to accelerate the amount of investment and development.
Perspectives - Venture Capital
Beco Capital expects significant MENA VC market growth // thenational.ae
According to Dany Farha, CEO of Beco Capital, fresh Venture Capital funds in the MENA region raised $175 million in 2014, six times the amount raised in 2013.  The momentum promises a potential boom in technology investment in the region over the next 5 years.
Companies, People & Profiles...
Company News
Ethos Private Equity looks northward for expansion // moneyweb.co.za

Ethos Private Equity expects to make its first pan-African investment by the end of the first quarter as it looks for growth north of the country's borders.  The investment will be made from the $800 million Ethos Fund VI, according to CEO Stuart MacKenzie.  

Read more...

Company News
CAD Fund opens office in Nairobi // medafricatimes.com

The China-Africa Development Fund is planning to open its regional HQ for East Africa in Nairobi. It's anticipated that the office will be operational by June 2015.

Read more...

Current Job Postings...
Highlighted Jobs...            
Private Equity Analyst at African Capital Alliance 

Based in Lagos, Nigeria

Read more...

PERE Associate at African Capital Alliance 

Based in Lagos, Nigeria

Read more...

Deal Lead for Renewable Energy Investing at Google 

Based in Mountain View, CA, USA

Read more...

Private Equity VP for Quantum Global 

Based in Zug, Switzerland

Read more...

Executive Director, Financial Services for AFC 

Based in Lagos, Nigeria

Read more...

Senior Associate, Infrastructure and Real Assets 

Based in Zug, Switzerland

Read more...

Investment Director for pan-African Private Equity fund 

Based in London, UK

Read more...

Investment Professional for Global Buyout fund 

Based in Nairobi, Kenya

Read more...

Deal originators for successful South African fund 

Based in Mombasa, Kenya

Read more...

New to AfCD this week
Partner, Africa Investments at LeapFrog 

Based in Johannesburg, South Africa

Read more...

Director, TAS at EY 

Based in Cairo, Egypt

Read more...

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

Nairobi, March 25th to March 27th, 2015 

Read more...

South African Impact Investing Conference 

Johannesburg, February 16th to February 17th, 2015 

Read more...

Africa Healthcare Summit 2015 

London UK, February 26th to February 27th, 2015 

Read more...

17th Annual Africa Business Conference 

Cambridge, USA, February 27th to March 1st, 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...

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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