Investors flock to $613 millon ECP Africa Fund III

International private equity firm Emerging Capital Partners (www.ecpinvestments.com), on 25 July announced the final closing of its ECP Africa Fund III PCC (Africa Fund III), with total commitments of over $613 million. It is one of the largest funds ever raised for investment across Africa and is the 7th fund managed by ECP, bringing the firm’s total capital raised to more than $1.8 billion, with more than $1 billion invested to date.
An article in the Financial Times (www.ft.com) suggests that the size and success of the fund indicates growing interest from investors into Africa. Some fund managers have reported increased inquiries, especially after all the media coverage of Africa as a business destination around the World Cup. However, most investors seem to need an experienced partner who will help them through the hurdles such as liquidity and market risk.
Africa Fund III includes over $450 million from return investors such as the African Development Bank, the International Finance Corporation, the Overseas Private Investment Corporation and CDC, the United Kingdom government development finance institution. The remainder came from new investors, including pan-African fund-of-funds manager, South Suez (www.southsuez.com).
Africa Fund III will seek controlling stakes or influential minority positions in high-growth companies through equity and quasi-equity investments, including convertible debt, in line with the firm’s usual strategy. It aims to invest in leading companies and will focus on under-penetrated markets where factors such as industry consolidation, positive macroeconomic trends, liberalization and improved regulations offer opportunities for above-market returns. It will also look for companies expanding regionally in various sectors such as telecommunications, natural resources, financial services, agriculture, transportation and utility businesses.
ECP is based in Washington but focuses on Africa. It has 10 years of experience investing in Africa through 7 successful funds, with investments in more than 50 companies spread across 40 countries. The investment strategy aims to deliver consistently above-market returns by focusing on economies uncorrelated to the U.S. and other developed nations. The ECP team operates from offices in Washington, D.C., Abidjan, Casablanca, Douala, Johannesburg, Lagos, Paris and Tunis.
The company says that Africa’s growth is not so likely to be affected by ongoing uncertainty in global credit markets, because most African governments, companies and individuals did not take on. It adds that debt forgiveness plans have seen external debt plunge as a proportion of economic output in Africa, improving credit worthiness. A press release quotes Vincent Le Guennou, co-chief executive officer of ECP, saying: “Investors can see development models that were successful in India, Brazil and Mexico and project that growth onto Africa. Many see Africa as the next place that’s going to boom as local companies adopt efficient management practices, financial discipline and governance standards.”
Hurley Doddy, co-chief executive officer of ECP, says in the press release: “The positive response we’ve received from investors for Africa Fund III demonstrates the growing appreciation of the tremendous investment opportunity that exists across the African continent. Our team has the optimal combination of local market knowledge, operational prowess and financial expertise to provide investors with diversification and competitive returns by sourcing attractive investment opportunities and expanding our portfolio company businesses into regional and global markets.” The FT quotes him as saying that the middle class in Africa is growing fast.
ECP has already started investing capital from Africa Fund III, with four investments totaling over $180 million:
• Financial Bank, which provides banking in 6 countries in Central and West Africa
• Wananchi Group, a pay television and high-speed internet provider in East Africa
• Groupe NSIA, an insurance company in West and Central Africa
• Thunnus Overseas Group in Madagascar and Cote d’Ivoire which provides 25% of the canned tuna in France.
The press release quotes Matthew Hunt, Director of South Suez, as saying: “With its long track record of successful investing in Africa and established presence via 6 regional offices, ECP is a first choice for us when looking at investing on the continent”. The FT quotes him: “Africa is mis-priced because it is misunderstood, so it has cheaper growth than other emerging markets due to a big gap between perception and reality.”
ECP argues that economic growth is widely spread across Africa, creating investment opportunities across sectors and in countries outside traditional commercial hubs. New technologies such as mobile telephony and the emergence of a middle class have shown that Africa is not simply a “resource play,” as many foreign investors once considered it.

2 Responses to “Investors flock to $613 millon ECP Africa Fund III”


  1. Norman Bakani

    Hello.
    Please help me to find an investor to fund my newly formed company to start dairy project in Botswana.

  2. SAMUEL BUHAMIZO

    Hullo
    am interested in partnership in our company dealing in meat products we need more funding in this business.thank you.