Archive for the 'Private Equity' Category
August 2nd, 2011 by Tom Minney
The International Finance Corporation (www.ifc.org) and 6 leading international finance institutions provided $164 million in financing to Rift Valley Railways International (www.riftvalleyrailways.com) to rehabilitate the Kenya-Uganda railway today (2 August). The aim is to boost cross-border trade and investment in East Africa. Other key shareholders are Kenya’s TransCentury, which listed on the Nairobi Stock Exchange on 14 July, and Uganda’s Bomi Holdings Ltd, reportedly owned by Charles Mbire. The financing is part of a $287m capital expenditure programme to improve the operating company’s infrastructure and rolling stock.
Other institutions participating in the package include: African Development Bank ($40m), Germany’s KfW Bankengruppe ($32m), Dutch Development Bank FMO ($20m), Kenya’s Equity Bank ($20m), Cordiant’s Infrastructure Crisis Fund ($20m) and the Belgian Investment Company for Developing Countries ($10m). The balance of the funding for the $287 million capital expenditure programme is being contributed by shareholders and generated through operations.
IFC is the largest financier to Rift Valley Railways and provides a $32m loan, of which $10m is already disbursed, and an additional $10m in equity to be committed. RVRI is a portfolio company of Citadel Capital, an Egypt-based private equity firm with $8.7 billion in investments across 14 countries in Africa.
The Kenya-Uganda railway line (apparently formerly nicknamed the “Lunatic Express”) has a track length of 2,350 kilometres with several branches extending from Mombasa, through Nairobi and right across key parts of Uganda. The rolling stock is 219 locomotives and 7,500 railroad cars. Brown Ondego, Group Chief Executive Officer of RVRI, said in a press release: “Our rehabilitation programme has already delivered impressive early results. Net “ton kilometres” were up 9% in the first half of 2011, compared with the same period last year, while turnaround times — a key measure of asset utilization — on the strategic Mombasa-Kampala route dropped 27% in the same period. Year-on-year, we have also seen a 30% drop in accidents per train kilometre.”
Karim Sadek, Managing Director at Citadel Capital, said: “This financing package is the backbone for an ambitious 5-year rehabilitation programme that will see Rift Valley Railways International make a quantum leap in operating standards as it addresses safety issues, completes due maintenance to improve reliability and hauling capacity, improves service to passengers, and captures long-term gains through investments in information technology.”
IFC has been key in encouraging private investment in the Kenya-Uganda railway since the consortium won the private management contract in 2005. After the project’s initial sponsor left, IFC led the restructuring of the shareholder group that resulted in the entry of new project sponsors and investors.
Jean Philippe Prosper, IFC Director for East Africa, said: “IFC has provided leadership and dedicated significant resources to encourage the turnaround of the Kenya-Uganda rail project. We are committed to the success of this railway as part of a broader effort to encourage private investment in infrastructure that promotes regional integration and social and economic development in Kenya, Uganda, and the surrounding region.”
Transport prices in East Africa are among the highest in the world, largely due to heavy reliance on trucking. A lack of operating capacity has resulted in rail capturing less than 10% of East Africa’s transport market. An efficient rail network has the capacity to reduce East African transport costs by as much as a third, since rail transport is more efficient to operate and in fuel.
IFC is a member of the World Bank Group and the largest global development institution focused exclusively on the private sector. In the fiscal year 2011, amid economic uncertainty across the globe, IFC said it boosted investments to an all-time high of nearly $19bn.
July 25th, 2011 by Tom Minney
Private equity fund management Aureos Capital (www.aureos.com) has become a founding partner of an emerging markets trade initiative called “Trade Out of Poverty”. Aureos specialises in investing in small and medium-sized businesses in emerging markets, and was a member of UK Prime Minister David Cameron’s recent curtailed trade mission to Africa.
Trade Out of Poverty aims to improve access of all least-developed and low-income countries to international trade, calling for the removal of trade barriers, simplification of trade rules and investment in infrastructure links to boost trade. It is supported by an All-Party Parliamentary Group co-chaired by Rt Hon Clare Short MP and Rt Hon Hilary Benn MP (both recent Secretaries of State for International Development), Rt Hon Peter Lilley MP (former Secretary of State for Trade and Industry), Lord (Michael) Hastings (KPMG Global Head of Citizenship and Diversity) and Sir Menzies Campbell (former leader of the Liberal Democrats).Other backing has come from former UN Secretary General Kofi Annan, CAFOD (the Catholic Overseas Aid Development Agency), Oxfam, Sir Bob Geldof and Dr Mo Ibrahim.
Aureos manages $1.3 billion invested in small and medium-size businesses in over 50 countries. It specialises in providing expansion and buy-out capital to small and medium sized businesses across Asia, Africa and Latin America and has extensive experience of helping its investee companies to develop trade with both major developed economies and other emerging markets countries.
Sev Vettivetpillai, Chief Executive of Aureos, will join the Trade Out of Poverty Advisory Council and said in a statement on 25 July: “Aureos has first-hand experience of the challenges companies in developing markets face, and we know that even extremely successful businesses in developing countries can find it difficult to access regional and international markets.
“Aureos can help our investee companies to grow and develop international connections. The benefits can be significant: creation of new jobs, increased cross fertilisation of valuable ideas and access to vibrant growing markets. This leads to greater provision of essential goods and services. Most importantly for us, it creates shareholder value in our portfolios and increases the financial upside for our investors, whose continued support for investment in these markets is critical.
“However, for large-scale transformation more must be done on a national and international level.”
Peter Lilley said: “We are very grateful for the generous support we have received from Aureos, which will go some way to helping us achieve our objectives and enable the world’s poorest countries to trade their way out of poverty.”
Aureos runs 17 regional private equity funds through its network of 28 offices worldwide, by a team of over 90 investment professionals who combine world-class financial and operational expertise with unrivalled local knowledge and experience. Investors in Aureos funds include institutional investors, bilateral and multilateral development finance institutions, pension funds, sovereign wealth funds, fund of funds, family offices and foundations and high-net-worth individuals.
July 7th, 2011 by Tom Minney
Kenyan private equity firm TransCentury (www.transcentury.co.ke) is to list through introduction at the Nairobi Stock Exchange on 14 July at a price of KES50 (USD0.58) a share. The firm began as an investment club and is valued at KES13.35 billion ($148.7 million). The listing price is based on the closing price on 3 June when it stopped trading on the Over-The-Counter market operated by Dyer & Blair. The aim of the NSE listing is to widen the share register and clear the way for future capital raising.
Listing by introduction means that no new shares are issued and was previously used by Equity Bank in 2006. Transcentury will list on the NSE’s Alternative Investment Market Segment (AIMS), which requires that a company must have at least 100 shareholders, with more than a fifth of the shares in the hands of investors who are not employees or relatives of the principal shareholders. To be listed on the main board, Transcentury would need at least 1,000 shareholders, net assets of KES 100m and paid-up share capital of KES 50m. TransCentury does not have 1,000 shareholders but could move to the main board if it increases its shareholding.
Transcentury started in 1997 as a small business club run by an elite group of 20 well-connected leading businessmen. It used the OTC market to widen to 430 share owners who have agreed to list 418 million shares, of which 151m will be reserved for buyers of a convertible bond on sale in Mauritius. Another 182m shares are in reserve.
Gachao Kiuna, TransCentury chief executive, was reported in Business Daily newspaper saying the listing provides a broader base of investors with an opportunity to participate “in significant growth potential” and offers TransCentury the opportunity to raise capital more easily in the future. He said the company is not in a hurry to raise more capital: “We have a bond programme in place that will serve us in the medium term. After about 24 months we might need to look at other ways of raising funds.”
Transcentury founders will be able to sell up to 50% of their shareholdings but must keep the rest for 2 years, in terms of rulings by Kenya’s Capital Markets Authority. According to the newspaper, 13 shareholders have more than 3% each, amounting to 190m shares or 71% of Transcentury. The largest single owner is the estate of the late James Gachui with an 8.37% stake worth KES1.12bn. Kenya Revenue Authority’s Commissioner General, Michael Waweru, has a 7.96% per cent stake worth KES Sh1.06bn, followed by businessman Peter Kanyango with a 7.17% stake worth KES957m, Dyer and Blair chairman Jimnah Mbaru and TransCentury’s chairman Zeph Mbugua with stakes worth KEs830m each.
Mauritius Eurobond
Transcentury has taken the interesting approach of raising low-cost financing through a $75m 6% convertible Eurobond, issued by Mauritian subsidiary TC Mauritius Holdings Limited which has already issued $35m. The company plans to list the Eurobond on the Mauritian stock exchange.
Private equity investment portfolio
According to its website, Trancentury invests in:
• Power Infrastructure: Manufacture of Electrical Cables, Conductors, Transformers and Switchgear
• Transport Infrastructure: Operation of the Kenya-Uganda Railway Concession
• Specialised Engineering: Distribution of Mission-Critical Industrial Equipment and Construction of Electrical Installations
“The philosophy is to pursue markets that display underpenetration and inefficiency”. Africa suffers a chronic under supply of power and transportation, and even when these services are available, the costs are multiples of comparable services in developed markets.
TransCentury owns stakes in cable factories which include East African Cables in Kenya and Tanzania, Cableries du Congo in DR Congo and Kweberg Cables in South Africa, which manufacture wires and transmission cables under its power infrastructure division. The company recently acquired 80% of Pende Electrical, based in the copper-belt region of Zambia, through its Tanzania subsidiary Tanelec Ltd. It is busy in energy in 5 countries.
The Information Memorandum indicates that TransCentury intends to invest KES 2.2bn raised through the bonds “in the KES 23bn capital expenditure programme to revitalize Rift Valley Railways and unlock the significant value of the railway.” Shareholders in the Kenya-Uganda railway are contributing additional funds to shore up the company’s capital base to repair the railway and buy new locomotives. The project had been held up by rows with Egypt’s Citadel Capital.
The remaining KES 3.87bn raised will be invested in other mega projects. The Information Memorandum states: “This will allow TCL to pursue additional investment opportunities in the power and transport infrastructure as well as in specialized engineering that meet our expected rate of return of 25%.” These could include a 100MW geothermal power station in Menengai for which the company has submitted an expression of interest and for which the value of the investment could be KES 8.1bn. South Sudan is another area with promise and the company would hope to benefit if the Kenyan Government privatizes key stakes in major industries.
“Our plan is to invest in infrastructure across the region with focus on mines, engineering and transport,” said Dr Kiuna.
Trading results
The company doubled net profit to KES 468m in 2010 compared to 2009, while revenue grew by 25% to KES 7bn. It increased its dividend 4-fold, from 5 cents to 20 cents. Earnings per share were KES 1.29, showing a conservative dividend policy and the company boasted compound annual growth in profit after tax of 52.9% between 2003 and 2010.
June 22nd, 2011 by Tom Minney
Pan-African private equity firm Helios Investment Partners (www.heliosinvestment.com) announced that it had raised $900 million for its second Africa-focused private equity fund. The final close for Helios Investors II L.P. was at the target set, and a 13 June company press release says that the fund was over-subscribed with more than $1 billion of demand. It is the largest Africa fund raised.
The new fund will follow the investment strategies of Helios’ first fund, looking at new businesses, growth equity investments, structured investments in listed entities and large leveraged acquisitions. It is focusing on high-growth sectors including sectors which have been deregulated, are core to the economy and where Helios has expertise, including telecommunications and media, financial services, power and utilities, distribution and logistics and fast-moving consumer goods (FMCG). The target investments are $25 million to $250 mn of equity per transaction ion various forms. It aims to make investments over 4 years and to hold assets for 3-5 years.
Helios II fund has already made 3 investments:
- It acquired Interswitch, Nigeria’s leading electronic payments processing company for $110 mn;
- It established Helios Towers Africa which builds and operates telecommunications tower businesses across Africa, and acquired portfolios of telecommunications towers in Ghana, Tanzania and the Democratic Republic of Congo (DRC);
- It acquired Continental Outdoor Media, Africa’s largest outdoor advertising company.
Helios has also recently announced the acquisition of Shell’s downstream fuels business across Africa.
According to the press release: “Continued political and market liberalisation and strong economic growth have prompted global investors to evaluate investment opportunities in Africa more closely. The Fund’s potential to make attractive risk-adjusted returns with comparatively low correlation to developed markets enabled it to attract a diverse investor base, which includes support from institutional investors in the predecessor Helios fund, as well as first-time commitments to Africa from a broad range of endowments and foundations, funds of funds, corporate pension funds, sovereign wealth funds and development finance institutions across the USA, Europe, Asia and Africa.”
Helios’ team of investment professionals have good understanding of African markets and global private equity experience. Helios has also developed a Portfolio Operations Group, who work with the managers of the companies which the fund invests into, in order to create value within the firm’s portfolio by driving operational improvements.
Helios Investment Partners operates funds and related co-investment entities, aggregating more than $1.7 bn in capital commitments, and is one of the largest investment firms focusing on Africa. It was established in 2004 by partners Tope Lawani and Babatunde Soyoye who still lead it and is among the few independent pan-African private equity investment firms founded and managed by Africans.
Helios’ portfolio companies operate in more than 25 countries and in various industrial sectors. The firm has experience across a broad range of industries and investment types – leveraged buyouts, recapitalisations, joint ventures, seed-stage venture capital, restructurings, and strategic public equity investments.
Limited partners in Helios’ funds include several leading global funds of funds, endowments and foundations, sovereign wealth funds, family offices, high net-worth individuals and development finance institutions. According to website www.privateequityafrica.com, 72% of its commitments are from private and institutional investors and the rest from development finance institutions.
June 20th, 2011 by Tom Minney
Leading African and Middle Eastern private equity investor Citadel Capital (www.citadelcapital.com) said yesterday (19 June) that Egypt’s public prosecutor has lifted a travel ban imposed in April on its chairman Ahmed Heikal, according to a report on Reuters.
The company announced on 16 June that Citadel Capital Partners Ltd. (CCP), the vehicle through which members of the Executive Committee hold their equity in Citadel Capital, sold approximately 13.4 million shares in Citadel Capital with a total amount of approximately EGP 74 mn (US$12.4 mn) last week and lent the money to Citadel “to strengthen the firm’s cash position”.
According to the Reuters report, the Government had ordered Heikal not to travel while investigators probed corruption allegations against several business leaders and government officials linked to former President Hosni Mubarak. Heikal and former prime minister Atef Obeid were accused of links to profiteering and embezzling public money. Reuters reports that Citadel shares fell 10% after the ban on 14 April and have lost a third of their value since the start of the year. Citadel is listed on the Egyptian Exchange (CCAP.CA).
According to the report, Citadel said: “The public prosecutor has agreed today to remove the name of Ahmed Heikal, the company’s chairman, from the list of people banned from travelling.”
Reuters also says that Dubai-based Abraaj Capital (www.abraaj.com) has talked with Citadel about possibly buying a stake. FT Tilt also has an interesting story on the deal, discussing whether Abraaj is seizing an opportune moment and noting that Citadel shares climbed sharply in trading on 19 June.
CCP owns approximately 33% of Citadel Capital SAE shares as of 16 June 2011 and the company statement does not say who bought the shares. CCP has lent the funds to Citadel Capital “until regulatory approvals are obtained for the planned capital increase”.
According to the company, Citadel Capital has $8.7 bn in investments under its control. It “focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The firm’s 19 OSFs now control Platform Companies with investments worth more than $8.7 bn in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy.
“Since 2004, Citadel Capital has generated more than $2.5 bn in cash returns to its co-investors and shareholders (on investments of $650 mn), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2006-2011, as ranked by Private Equity International).”
June 16th, 2011 by Tom Minney
Interesting article in this morning’s (16 June) FT Tilt by Sid Verma on whether Chinese investors are squeezing out private equity investors. He cites a global PE fund manager who reportedly told yesterday’s (15 June) Africa Forum 2011 conference organized by Private Equity International (www.peimedia.com): “Chinese investment in infrastructure projects in the construction phase have phased out” the development of local engineering platforms, the infrastructure-focused domestic institutional base and local managerial expertise.”
Verma looks at criticism of Chinese projects which are often criticized because they are funded with cheap Chinese loans provided the work goes to Chinese firms, and sometimes linked to resource extraction. He argues that in many cases Chinese investment is going into the early construction phase rather than operating infrastructure. Therefore where there is a completed infrastructure project that could generate revenues (port, toll road, etc.) there is often a new round where investors could get involved in the management. He writes: “It is feasible that a secondary market for such projects could develop in the coming years as Chinese investors unwind their exposures once they hit the operating stage; and/or seek to change the risk profile of an investment; and/or maximise income from operations through a capital market refinancing. These developments would surely provide a bounty of opportunities for foreign PE firms and banks.”
Usually if we think of Chinese private equity we think of dragon giant, China Africa Development Fund (www.cadfund.com). Verma and notes that Hony Capital (www.honycapital.com), a China-focused private equity investor with $4.4 bn of assets under management, which in January spent $110 mn to buy Interswitch, a Nigerian payment processing company.
The forum continues today.
Of course, better to read his article for yourself here.
June 11th, 2011 by Tom Minney
Giant UK development finance institution the CDC Group has announced a radical new business plan after a review of its organization and activities, following media and political criticism. Chief changes for the leading private equity investor are a return to direct investing from a fund of funds approach, and focusing only on low and lower-middle income countries in sub-Saharan Africa and South Asia.
At the end of 2010, CDC group was invested in a portfolio worth £1.9 billion ($3.1 billion), according to its website www.cdcgroup.com, invested in 143 funds managed by 71 managers and these funds had invested into 930 portfolio companies in 70 different countries. CDC had started investing into funds in 2004 after selling off stakes in Actis and Aureos funds. Like other leading development fund managers it aimed to build capacity among African fund managers.
The change comes after the review in 2010 by the Secretary of State for International Development, Rt Hon Andrew Mitchell MP. A new CEO is to be appointed.
Direct investments and ESG
According to the new business plan, as outlined in a press release, direct investments will be 20% of the portfolio by 2015, and CDC will target businesses with high potential development impact and manage these investments in a hands-on way to gain more expertise. Debt investments will be up to 20% of CDC’s total portfolio by 2015, so that CDC can target frontier markets where investment infrastructure is underdeveloped. Small and medium enterprises are a key target and it will offer guarantees to help businesses to obtain credit, commercial bonds and trade finance. CDC will also explore the role of technical assistance to make capital more developmentally effective. It will aim to match all its funding with equal amounts of third party capital.
In future CDC will concentrate exclusively on the low- and lower-middle income countries in sub-Saharan Africa and South Asia where 70% of the world’s poor live. In lower-middle income countries, CDC will focus on regions and sectors of need where capital is scarce and will avoid sectors which are already attracting capital from other investors.
The group will step up standards of environmental, social and governance (ESG) at investee businesses and there will be independent valuations of the development impact of funds. It says it will “lead the way among DFIs on openness and accountability”. CDC will update its investment code regularly and disclose more information about the organization, its investee businesses and its partners.
Innovation in deals and “appropriate” pay
It will also set up a new innovative finance division to explore opportunities in exceptionally challenging investment circumstances, which need innovation in deal origination and the ability to draw on a wide range of financing approaches.
It will also change the way it pays staff: “Remuneration will be appropriate for a publicly-owned body whose purpose is poverty reduction. CDC must be able to recruit and retain people with the right approach and skills to deliver the company’s development mission. CDC will follow applicable FSA guidance and EU legislation so that variable performance pay will be largely deferred and based on long-term performance.”
Andrew Mitchell MP, Secretary of State for International Development said: “This is a bold and exciting new departure for CDC. The reforms will help them direct their capital better, fostering economic growth in countries which need it most. CDC will be better able to drive investment into areas currently starved of capital. It will become more nimble, flexible and transparent, able to influence and control the impact of their capital and measure its success in reducing poverty, not simply in turning a corporate profit.”
The action begins
The new business plan is already in action. CDC this year invested $30 million in funds helping provide long-term loans and guarantees to address an acute shortage of capital for green energy in developing countries. CDC is investing $30m in a new agribusiness fund in Africa focusing on Zambia, Tanzania, Malawi and Mozambique. A further $30m has been invested in basic African infrastructure such as toll roads, ports, railways and energy.
Richard Gillingwater, CDC’s chairman says: “These reforms deliver a more versatile and pioneering CDC. Our ambition is make the biggest difference possible to lasting development.”
According to a story on the leading website www.privateequityafrica.com, CDC currently has an African private equity portfolio worth £877million, which includes the £122 million it invested in new businesses in 2010. The investor additionally committed funds to 8 Africa-focused managers in 2010, including a maiden fund Catalyst Principal Partners I focused on East Africa.
June 3rd, 2011 by Tom Minney
South African private equity firm Paladin Capital (www.paladincapital.co.za) has listed its 76% subsidiary Curro Holdings (www.curro.co.za) on the JSE’s AltX on 2 June. Curro, which offers private schooling, aims to raise another R322.4 million ($48 million) through a rights offer after the listing, according to a news report on Fin24.com, in order to reduce the weight of debt on the balance sheet.
The rights offer will be partially underwritten as JSE-listed Paladin (PLD) will retain its majority stake and PSG Financial Services (www.psggroup.co.za), a diversified financial services firm which owns 80.6% of Paladin, will underwrite the offer. Previously Curro’s expansion was funded by debt finance provided via Paladin, including a 10-year loan of R73 mn ($10.8 mn) from the International Finance Corporation.
Curro was founded in 1998, with 28 learners receiving tuition in a church building in Durbanville. It has grown to over 5,500 learners at its 12 schools in the Western Cape, Gauteng, Mpumalanga and Limpopo, all in South Africa. It plans to add 40 more in the coming 9 years and each school requires R30 mn-R70 mn capital outlay.
Curro CEO Chris van der Merwe says: “The public education sector has a huge responsibility to supply enough schools for the ever-increasing number of children, and many state schools are becoming overcrowded. Curro Holdings can complement the public sector and ease the pressure by supplying affordable private school education for children aged 4 to 18.
“Our schools are staffed by trained and experienced teachers and our tuition fees are lower than those charged by high end, more expensive private schools. As a result, we have experienced sharp growth and there is ongoing demand for our schools,” he said.
Noah Greenhill, the JSE’s head of marketing and business development at the JSE, said the AltX gives an opportunity for good quality, high growth companies to raise capital to fund future growth. “Education is a critical element in the development of South Africa and AltX plays an important role in facilitating the growth and development of companies such as Curro.”
Last year Paladin paid R52 mn ($7.7 mn) to boost its stake in Curro to 76%. Paladin chairperson Jannie Mouton wrote in the annual report: “Without downplaying the other segments, education is an industry in which Paladin believes above-average potential exists. This is where management sees significant growth in the foreseeable future.”
He said Curro offered fees of up to 40% lower than its competitors: “Curro aims to be a high-quality, value-for-money alternative.” He pointed out that only about 3% of pupils attend private schools, while 22% of South Africa’s population received private healthcare. He said few new schools were being built in middle- and upper-income areas, and waiting lists at private schools were long.
Paladin’s annual report valued the 50% stake in Curro – before the latest additional 25% stake was acquired – at R100m, representing 9% of Paladin’s total R1.167bn. portfolio. Curro operated a loss of R300,000 in 2007, then had an after-tax profit of R300,000 in 2008, R1.9m in headline earnings in 2009 and R5.2 m in 2010. Mouton said profits would not rise fast while Curro was in a growth phase “due to the amount of leverage used”.
Advtech is the only private education company listed on the JSE has a market capitalization of R2.4bn. It is the owner of brands like Crawford Colleges and Abbotts.
Last year Paladin made an after-tax profit of R208 mn when it received R354 mn from the sale if its 123.47 mn shares in Namibian fast-moving consumer goods group CIC, also listed on the JSE, to Imperial Holdings. The compounded return was 64.8% over 4 years. It also sold its stake in Lesotho Milling for R26 mn after investing R21 mn and receiving R7 mn in dividends.
Paladin’s portfolio includes listed investments such as Capitec bank, the JSE Ltd and Steinhoff as well as unlisted investments such as Curro, empowerment investment group Thembeka Capital and Protea Foundry. Paladin spent R30 mn on another 10 mn shares in Petmin, R23 mn on another 17 mn shares in Erbacon and bought another 3.8% stake in Spirit Capital and provided R50 mn of debt funding so Spirit could acquire skin care and beauty distributor Annique and fashion accessory distributor Honey. It has also recently bought a 45% interest in Energy Partners.
Full details of the portfolio can be found in Paladin’s annual report to February 2011, downloadable here.
May 31st, 2011 by Tom Minney
Private equity funds focusing on Africa are becoming more active and making more deals. At least 12 deals were closed in the first five months to May 2011, compared to 19 deals in the whole of 2010, reports leading website Private Equity Africa which cites data from the research house Preqin.
The disclosed total value of the investments was $1.8 billion, compared to $600 million of deals made in the whole of 2010. Private Equity Africa reports that at least 5 more investments are set to be closed by June this year, according to its sources.
The peak was in 2007, when investors closed $7 billion across 34 deals, according to Preqin data. Current levels of aggregate deal making values are similar to those seen in 2008. Then came the global financial crisis and both deals values and volumes have slumped. 2010 saw the lowest number of deals since 2006.
Prominent among this year’s deals, according to the report, is Nigeria’s ACA Capital which invested into a $750 mn transaction in Union Bank, while New York headquartered Vine Capital Partners led a consortium of investors to recapitalize Afribank, based in Lagos.
Egypt’s Citadel Capital backed a $39.5million turnaround investment in Tenth of Ramadan for Pharmaceuticals and Diagnosing Products (Rameda). The deal was structured through its subsidiary Sphinx Private Equity Management.
Financial technology investments were to the fore. Horizon Equity Partners exited its financial technology portfolio company, Peresys, in South Africa through a $56.4million trade sale to Australia’s IRESS, generating 14 times returns on cost. Adlevo Capital’s specialist technology fund made its first transaction, partnering with Helios to back a $110 mn InterSwitch deal. In the same sector, Sarona injected $300,00 in Mobile Transactions Zambia, described on Grassroots’ Business Fund website as “the fastest growing company in Zambia and one of the fastest in Africa”.
A partner at an Africa-focused private equity investment company in London told Private Equity Africa: “We have been very busy this year. We have already done more deals in 2011 than we did in the whole of last year.”
May 25th, 2011 by Tom Minney
Top African private equity seminar in London coming up in the evening of 2 June. It is organized by the team at Private Equity Africa (www.privateequityafrica.com) and features a big line up of top speakers and networking.
The event is titled “Risks, Regulations and Returns” and will be in a great hotel just by Tower Bridge, central London from 6:30pm. The discussions cover : recent regulatory changes, managing political risks, mitigating key legal risks, managing risks in the deal cycle and risks versus returns. Also expect discussions on due diligence and market risks impacting private equity investing in Africa and how investors mitigating risks to achieve targeted returns.
The speaker line up includes Jean-Marc Savi de Tove, Portfolio Director, Africa, CDC; Hal Bosher , Senior Underwriter, World Bank-MIGA; Zin Bekkali, Chief Executive Officer, SilkInvest; Susan Payne, Chief Executive Officer, Emergent Asset Management; Idris Mohammed, Partner, Development Partners International; Douglas Nordlinger, Partner, Skadden, Arps, Slate, Meagher & Flom; Bayo Odubeko, Partner, Norton Rose.
There is a VIP bookable Investors Briefing and Networking Session for current and prospective institutional and fund investors.
For bookings and more information on this event, check here.