January 29th, 2013 by Tom Minney
Entrepreneurs running small and medium-enterprises (SMEs) in West and East Africa stand to benefit from a new $75 million private equity fund. The announcement follows the news on 29 Jan that two long-term partners are merging.
InReturn Capital (www.inreturncapital.com) is a private-equity company based in Nairobi (Kenya) that invests in SMEs across East Africa, and it plans to close a legal merger in the first quarter of 2013 with London (UK)-based Jacana Partners (www.jacanapartners.com), a private equity specialist in SME investments, which has been building capacity in private equity managers in Africa.
The new partnership will offer a significant boost for East African entrepreneurs seeking value-add expertise and growth capital. InReturn was investing in transaction size of $0.5m-$1.3m and the partnership with Jacana will mean increased access to private equity investment, dedicated investment teams on-the-ground coupled with international private equity expertise and larger deal sizes of between $1m-$5m.
InReturn has rebranded as Jacana Partners. The two firms have been working together for 3 years. Jacana’s West African operations (previously Fidelity Capital Partners) rebranded in August 2012. This creates a leading pan-African SME private equity firm with pan-African coverage which will manage the new $75m SME fund expected to close later this year.
Jacana currently operates in 6 markets (Ghana, Kenya, Liberia, Sierra Leone, Tanzania and Uganda) and intends to move into 2 new countries with the new fund, possibly Ethiopia, Nigeria and/or Francophone West Africa. It is the only pan-African private equity company with a permanent commitment to the SME sector.
Jacana has invested over $20m to date in 20 portfolio companies employing over 1,300 people. In East Africa, 5 investments have been made to date in a stone quarry, an eye care centre, a supplier of tarpaulins to the relief sector, a serviced office provider and a logistics company and several other transactions are contemplated in the next few months.
Professor Njuguna Ndung’u, Governor of the Central Bank of Kenya commented in a Jacana press release: “East Africa is undergoing a period of rapid economic growth largely fuelled by the expansion of our small-to-medium sized enterprises – key generators of job creation and GDP growth. The merger being rolled out today brings scale to the financing of SMEs which will boost their contribution to East Africa’s economic growth. It is my expectation that we shall see more similar initiatives to scale up financing to SMEs that lie at the heart of development blueprints for governments in the region.’’
Passionate about Africa’s entrepreneurs
Getting closer: Ezra Musoke (left) and Anthony Gichini (right) of InReturn Capital flank Simon Merchant CEO of Jacana Partners.
Anthony Gichini, Partner at InReturn Capital said: “The merger of InReturn Capital with Jacana Partners represents a big step forward in private equity investment for SMEs in East Africa. Jacana’s unique model combines international private equity experts with highly-experienced local teams, meaning our entrepreneurs benefit from strategic advice from international business experts as well as dedicated African investment managers on-the-ground who can add-value and provide hands-on management support. This combination is our winning formula which helps us build strong businesses and deliver superior returns.”
Simon Merchant, CEO of Jacana says: “Jacana Partners is a pan-African private equity firm that invests in entrepreneurs, builds successful SMEs and delivers sustainable financial and social returns. We do this because we are passionate about entrepreneurs as the key drivers of job creation and long-term economic development in Africa. Jacana is uniquely structured to overcome the challenges of private equity investing in SMEs in Sub-Saharan Africa. Combining internationally experienced private equity veterans with highly skilled teams on-the-ground, Jacana has the experience, knowledge and resources to structure great deals, grow sustainable businesses and deliver superior returns.
“By merging our African and European operations, we are consolidating our business into a single fund manager, operating under the Jacana brand. As well as investing the remaining capital from our existing funds, the new Jacana will deploy a new $75m SME fund that we are currently in the processing of raising from international investors.
“The new fund will allow us to significantly increase the scale and geographic reach of our operations and will be invested in SMEs in up to 8 countries in East and West Africa. We firmly believe that a unified Jacana operating under the unique Jacana identity is the optimal platform upon which we can fulfill our mission of building the best SME private equity team in Africa, creating sustainable jobs and supporting long-term economic growth.”
November 24th, 2010 by Tom Minney
Liberia has reached a deal with 2 “vulture funds” who had taken it to court to repay debts incurred more than 30 years ago. According to a report on the BBC, Liberia is to pay just over 3% of the $43 million (£27 million) that they claimed it owed.
The companies are Hamsah Investment and Wall Capital, reportedly registered in the Caribbean although Hamsah is linked by the BBC to the boss of a US hedge fund. They had taken Liberia to court in New York and London, rather than join other creditors in accepting a debt write-off, although the final deal agreed seems close to the 3 cents in the dollar agreed with other creditors.
The BBC story says it is thought Liberia borrowed $6.5m (£4.1m) from the US-based Chemical Bank in 1978 and that debt may have been resold a number of times, but it says details of the debts are not clear. Another investor interviewed in an very watchable BBC film clip said he had bought debts from a bank that was not even aware that it had them. It is also not clear how the amount had soared to $43 million.
The 2009 London ruling ordered Liberia to pay $20m (£12m) – then equivalent to about 5% of the national budget. Liberia is still very poor and trying to rebuild after a 14-year brutal civil war ended in 2003. It is estimated that 250,000 people – one in 12 of the population – died. According to a report in the UK Guardian newspaper last year, average life expectancy is just 45, according to the World Bank. The money the two firms are claiming amounts to half the country’s health and education budget.
Liberia’s Finance Minister, Augustine Ngafuan, was reported as saying Liberia now had the structures in place to ensure that it did not rack up debts it could not afford to repay. At first Liberia wanted to challenge the court orders to repay the debt, but now seems to believe a settlement would be cheaper.
“Vulture funds” buy up the defaulted debts of poor countries and then demand swift repayment. Nick Dearden, of Jubilee Debt Campaign (www.jubileedebtcampaign.org.uk), was reported as telling the BBC’s Network Africa programme such funds worked by “harassing” poor, indebted countries: “They try to extract money from anyone trading with or investing in the country in question so, in the end, the country feels it doesn’t have much option.” He added that: “Liberia got a pretty big discount on the debt”.
Mr Ngafuan said: “We had to take extraordinary measures to ensure that monies coming to Liberia were not seized. It was a tough year.”
In September, the BBC reported that the 19-nation Paris Club of lenders pardoned $1.2bn (£764m) worth of debt owed by Liberia. At the end of June 2007, the country’s external debt was about $4.4bn and debt servicing took up a lot of the budget.
Mr Ngafuan said: “Since 2006, our government has not borrowed a dime from any country… In fact, we ran what is called a cash-based balance budget, meaning that Liberia lives within its means.”
On cancelling the debt, the Paris Club said it welcomed “Liberia’s determination to continue to implement a comprehensive poverty reduction strategy and an ambitious economic programme providing the basis for sustainable economic growth”.
The British Parliament passed a law in April that vulture funds should not be able to use UK courts again but there is a campaign underway at the Jubilee Debt Campaign that this should be extended beyond 1 year.
January 23rd, 2010 by Tom Minney
According to a report, the Central Bank of Liberia (www.cbl.org.lr) has given local company Cellcom permission to sell convertible debentures and the Liberia Bank for Development and Investment (LBDI) to sell shares although there is no formal stock exchange in Liberia.
According to a report in New Democract (www.newdemocratnews.com) the CBL had earlier said several companies were selling bogus shares.
Executive Bank Governor, Dr. Miles Jones reportedly informed journalists on 21 January that the CBL was not concerned about the legality of the business but that it will safeguard public interest by making Cellcom disclose its financial information.
He is quoted as saying: “The Cellcom offering comes at a time when the capital market in Liberia has yet to be developed, including having in place the appropriate regulatory and supervisory regime.
“The development of a capital market in Liberia has been an interest of the Central Bank of Liberia, and the Bank has recently announced the need for avoiding any actions on the part of businesses that have the potential of creating problems that could lead to a loss of confidence of the public in the issuance of shares and/or debt obligations ahead of the establishment of a well functioning capital market”.
Cellcom is also selling shares. According to the report, there have been share sales where people have rushed to buy shares without good financial information.
January 4th, 2010 by Tom Minney
Talks have started in Liberia on establishing a stock exchange and the Central Bank of Liberia (www.cbl.org.lr) is set to play a leading role, according to CBL Executive Governor Dr. J. Mills Jones.
He was speaking in front of President Ellen Johnson Sirleaf at the opening of Sinkor Branch of the Liberian Bank for Development and Investment (LBDI).
He also said the CBL is ready to create an autonomous body to regulate the market. The law apparently exists for proper and orderly development of financial markets, and Dr Mills Jones said he was concerned over unregulated share sales corporate institutions. He was quoted in Liberian Observer (www.liberianobserver.com) as saying: “They might have good intentions, but [that] does not guarantee good results. There is a need to be circumspect in charting an orderly course towards a regulated capital market,” Jones stated.
He also said that Liberia has been admitted into the West African Monetary Zone (WAMZ).