Archive for the 'Private Equity' Category
May 4th, 2011 by Tom Minney
Leading Africa private equity firm Kingdom Zephyr Africa Management Company (www.kingdomzephyr.com) today (4 May) announced the opening of its new office in Lagos, Nigeria. It has $615 million under management via its Pan-African Investment Partners (“PAIP”) funds and operates out of offices in Accra, Johannesburg, Lagos, London and New York.
The firm sees expansion into Nigeria as strategic. it is Africa’s most populous country and the second largest economy in sub-Saharan Africa. The IMF forecasts Nigeria will be amongst the world’s top 10 fastest growing economies between 2011-2015, with annual growth rate around 7%.
The new Lagos office boosts Kingdom Zephyr’s ability to source deals in West and Central Africa. The Nigerian economy is set to benefit from the transformation of the banking and financial services, oil and gas and power sectors, all target industries for the firm, which has already invested in United Bank for Africa plc and Ecobank Transnational Incorporated through its PAIP I Fund.
Kingdom Zephyr Partner Seyi Owodunni will head the Lagos office. Prior to joining Kingdom Zephyr, Seyi was the Chief Financial Officer of Starcomms Plc, a Nigerian telecommunications operator and triple-play provider. He said in a press release: “Lagos is a vital location for Kingdom Zephyr’s investment activities within West Africa as we actively look to partner with established, local businesses that have the capabilities to grow and expand across the African continent.”
“Nigeria’s economic growth has recovered from the temporary dip in 2009 on the back of higher oil prices as well as industry and government reforms.. Growth will be further aided by key demographic trends such as an expanding workforce, increasing urbanization and the rapid growth of Nigeria’s middle class; all developments that are consistent with our middle class consumer-focused investment strategy.”
Kofi Bucknor, Kingdom Zephyr’s Managing Partner, added: “Although Nigeria is still dependent on its oil sector, the government is beginning to take the necessary steps towards economic diversification and market liberalisation while, at the same time, corporate governance is steadily improving. This is making Nigeria an increasingly attractive proposition for private equity investors.”
Kingdom Zephyr is a joint venture between Zephyr Management, L.P. and Kingdom Holding Company. Headquartered in New York, Zephyr is a global leader in emerging markets private equity, having invested in Africa since the mid-1990s. Kingdom is the investment holding vehicle controlled by HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud of Saudi Arabia, a leading philanthropist and investor in Africa since 1996. Current PAIP Funds investments include Letshego Holdings Limited, a Botswana-based consumer lender, and Consolidated Infrastructure Group Limited, a South Africa-based power infrastructure company.
May 4th, 2011 by Tom Minney
Funds inflows into private equity in sub-Saharan Africa including South Africa (SSA) were $156 million in the first quarter of 2011, according to research by the Emerging Markets Private Equity association (www.empea.net). This is lower than the equivalent rate over the full year 2010 and a small proportion of the total $10.2 billion raised in the first quarter for funds dedicated to emerging markets (43% of the amount raised in all of 2010). Emerging Asia raised $9.5bn (93% of the Q1 total) and China-focused funds accounted for $5.4 bn of the total.
For the year 2010, private equity fundraising for Sub-Saharan Africa totalled $1.49 bn and the region saw one of the fastest growth rates in emerging markets, reports EMPEA. Aggregate funds raised was up 56% on 2009, while most emerging markets regions raised less funds, according to a report on website, www.privateequityafrica.com.
Brazil saw the biggest increase among emerging markets, with funds up by 169%, followed by Latin American and Caribbean region at 149%. China saw its funds grow by 13% year-on-year. Russia was down 84%, Middle East and Africa down 58%, India was down 11%, Emerging Asia down 18% and the collective Central and Eastern European region 25%).
Sarah Alexander EMPEA’s chief executive officer, commented: “While China and India will continue to anchor many investors’ portfolios, perhaps more than at any other time in recent history LPs are ready to entertain strategies that include markets previously seen as too risky or shallow, such as Latin America, Sub-Saharan Africa or Southeast Asia.”
Aggregate fundraising for the emerging market regions remained relatively flat at $23.5 bn, compared to $22.6 bn in 2009, and emerging markets were 11% of global fundraising. EMPEA says this is the highest share of global funds yet achieved by emerging markets private equity fund raising.privatequity10504_pe_tablesempea
May 4th, 2011 by Tom Minney
Pan-African private equity specialist Emerging Capital Partners (www.ecpinvestments.com) today (4 May) announced that Andrew Brown is appointed Chief Investment Officer (CIO) in a newly created position. He will join the investment committee of $613 million ECP Africa Fund III, which the company claims is the largest private equity fund for growth equity in Africa. The fund closed in June 2010 and has so far made 4 investments during 2010 in financial services, industrials and telecom/cable TV sectors across Africa.
Mr Brown will be based in ECP’s Paris office and will oversee and implement ECP’s investment process and strategy across its 6 active funds.
Vincent Le Guennou, co-founder, Managing Director and co-CEO of ECP, said in a press release: “Africa is one of the fastest-growing regions in the world and ECP is dedicated to seizing those opportunities. Andrew’s appointment adds operational experience, support and oversight to the investment process. Andrew has been operating in our core markets for well over a decade and is well suited to lead ECP’s investment process.”
Mr Brown said: “ECP has already invested more than US$1 billion through 50 investments in a variety of sectors across Africa in its decade of operation. I’m looking forward to working with the pre-eminent pan-African private equity firm and its outstanding team.”
He joins ECP from Amundi Private Equity (formerly Société Générale Asset Management Alternative Investments), which he joined in 2006 as CIO for the Kantara Fund, a multi-sector fund targeting private companies in North Africa, securing over €150m in funding and recruiting a North African investment team.
Mr. Brown first worked in emerging market private equity in 1998 when he joined CDC in London specializing in telecoms and infrastructure investments in Africa, Asia and Latin America. He moved to Cairo in 2001 to establish CDC’s Egyptian office. Following the creation of Actis from CDC he was the Actis Egypt Country Manager.
May 4th, 2011 by Tom Minney
Africa is soaring in its attractiveness to global private equity investors. In a survey by Coller Capital (www.collercapital.com) and the Emerging Markets Private Equity Association (www.empea.net), over the next 2 years, nearly 30% of global private equity investors (Limited Partners or LPs) investors plan to expand their PE investments in sub-Saharan Africa (including South Africa, SSA) and nearly another 10% plan to start investing. This puts Africa is ahead of markets such as Turkey, the Middle East and North Africa region, Russia/CIS, and Central and Eastern Europe.
According to an article on top African private equity website, www.privateequityafrica.com, fundraising for Africa is also growing fast. Year-on-year fundraising for sub-Saharan Africa was up 56% in 2009, compared to declines for Russia, Middle East and North Africa, India, Emerging Asia and the collective Central and Eastern European region and Commonwealth of Independent States.
Problems highlighted include 47% of LPs saying there are too few established fund managers in SSA and this is a primary deterrent to committing capital to the region. Political risk was a concern of 39% (highest in the world after Russia/CIS where it concerns 63%) and about 25% said the scale of opportunity to invest in SSA is too small (second to Middle East and North Africa, where 33% were concerned). Only 14% of respondents said they were discouraged by the difficulty of exiting their investments and only 2% said valuations are a problem (compared to India, where 58% said entry valuations are overheated, and 45% in China).
Erwin Roex, partner at Coller Capital, comments: “In reality, where competition is increasing in emerging markets private equity markets, it tends to be concentrated within a handful of sectors or a particular tier of the market where deals are large enough to attract global funds. Investors recognize there are still plenty of opportunities for skilled managers to supply value-added capital and to create returns for LPs.”
Two thirds of the LPs said they expect to boost the dollar value of their new investments in Emerging Markets in 2011/12, compared to new commitments in 2009/10. Three quarters look for economic growth as the main driver to increase commitments to emerging markets. More than half of LPs expect their emerging markets private equity commitments to generate returns of at least 16%, with about a quarter expecting this to be as high as 21% over the next 3-5 years. Only 33% of the respondents expected annual net returns of 16% from their global PE portfolios. Asia is the region that ignites the highest return expectations and Brazil replaces China as a top environment for fund managers (General Partners orGPs).
Two thirds of LPs (78% outside North America, 52% in North America) said environmental, social and governance compliance influenced their fund investment decisions and choice of fund manager (GP). They would also like to see higher participation from local investors, although some saw a potential misalignment of interests as likely to cause the friction.
Coller Capital partnered with EMPEA in the annual survey, undertaken in Jan-Feb 2011, which covered 156 global LPs, including 32% in fund of funds, 15% were direct foreign investors, 14% were pension funds, 13% bank and asset managers and 11% represented government-owned organisations.
April 5th, 2011 by Tom Minney
Zimbabwean private equity firm Brainworks Capital Management has reportedly launched a $20 million fund targeting Zimbabwe’s agriculture, financial services, mining and telecommunications sectors, according to a report on www.privateequityafrica.com.
The Herald newspaper says Brainworks Capital was established earlier in 2011 and will enable Zimbabweans to own stakes in a wide range of companies as required by indigenization laws. Brainworks is offering 400 milion ordinary shares at US$0.05 each to pension funds and local and foreign institutional investors.
According to the Herald, Brainworks is targeting an internal rate of return of 30% on its investments and looks for equity stakes of at least 25% and representation on the board of its investee companies. It aims to hold investments for 3-5 years. It was founded by investment banker George Manyere, who used to work with the International Finance Corporation, and chartered accountant Mr Walter Kambwanji who used to work with HSBC. They have a combined 12.9% shareholding in Ecobank Zimbabwe, formerly Premier Banking Corporation. Mr Manyere is the managing partner and Chief Investment Officer and Mr Kambwanji is a partner and Chief Finance Officer.
The fund has reportedly arranged $6.8 million in bank financing. It aims to invest the biggest part of its funding in gold mining. In January Cape Range Ltd (www.caperange.com.au), listed on the Australian Securities Exchange, announced that its subsidiary Cape Range Zimbabwe (Private) Ltd has entered an option agreement with Brainworks subsidiary Brainworks Capital Mining (Private Ltd), in which Brainworks would offer $2.4 mn for 30% of the company and become indigenization shareholder. Cape Range comments: “This transaction is seen as an extremely positive move forward for the Company to operate in Zimbabwe, as Cape Range endeavours to comply with the Zimbabwean Indigenisation and Economic Empowerment Act.” However, the option expired on 31 January.
Another subsidiary, Brainworks Capital Financial Services, assumed effective ownership of the 12.9% shareholding in Ecobank Zimbabwe and it can boost its stake to 30% in line with indigenisation approval conditions that were set when Ecobank invested in Premier.
Non-executive directors are: Mr Richard Muirimi (chairman), Vulindlela Ndlovu, Alwayn Scholtz (Scholtz Attorneys in South Africa), Swiss-based Cornel Vermaak and German Dirk Harbecke.
March 28th, 2011 by Tom Minney
Global alternative asset manager The Carlyle Group on 24 March announced that it has established a team to conduct buyout and growth capital investments in Sub-Saharan Africa. The initial target for the new fund is $500 million, according to Reuters (although the Financial Times earlier put the target at $750 mn and said there will also be an office in Zimbabwe). Carlyle has $97.7 billion under management including $16.6 bn in emerging markets. The news comes at a time when some major private equity funds are also being raised.
The Carlyle SSA team will make buyout and growth capital investments in private and public companies from offices in Johannesburg and Lagos, focusing on transactions where Carlyle has distinctive competitive advantage and can create tangible value for the companies invested into. It would aim to contribute specialized knowledge of industries, to add expertise and give access to a global network. Initial target industries include consumer goods, financial services, agriculture, infrastructure and energy.
The team is jointly led by Managing Directors Marlon Chigwende (former Managing Director & Head of Private Equity Africa for Standard Chartered Bank), and Danie Jordaan (former Executive Committee Member and Partner of Ethos Private Equity). The team also includes Managing Director Genevieve Sangudi (most recently a Partner and Managing Director of Emerging Capital Partners with some of the biggest private equity funds going into Africa). Mr. Jordaan begins his duties immediately while Mr. Chigwende and Ms. Sangudi will begin in early May.
Greg Summe, Carlyle Managing Director and Vice Chairman of Global Buyout, said in a press release: “Sub-Saharan Africa is one of the fastest growing regions in the world, driven by favorable demographics, expanding domestic industries and an improving political environment. Carlyle’s SSA team comprises African nationals with deep market knowledge, broad networks across the continent and extensive experience in private equity transactions. The Africa team’s expertise should be a powerful combination with Carlyle’s deep industry experience and global platform.”
Co-head Danie Jordaan said, “We are excited to join Carlyle, with its demonstrated ability to build thriving private equity businesses across emerging markets. As SSA gains from political and economic reforms, demand for basic services and infrastructure is dramatically increasing. The entrance of a global player like Carlyle into SSA is a testament to the region’s progress and prospects and will attract more capital and talent to the region. We also believe Carlyle’s global network will facilitate the growth of its SSA investments in the major international markets.”
Carlyle has a formidable reputation for its ability to raise funds.
Carlyle’s Commitment to Emerging Markets
Carlyle is based in Washington DC. According to the company’s press release, since Carlyle first began investing in Asia in 1999, it has deployed significant capital and resources in markets including South America, China, India, South East Asia and Middle East and North Africa. It set up a Middle East North Africa team in November 2006 and finished raising $500 mn in funds for this in 2009.
Since 1999, Carlyle has invested $6.4 bn in equity and has $16.6 bn in assets under management in emerging markets. It employs 160 professionals in 12 offices in 9 emerging market countries.
March 9th, 2011 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, on 8 March announced it was investing $10 million in equity in Catalyst Fund I LLC. The fund aims to stimulate employment and accelerate economic growth across East Africa by improving access to equity financing for emerging and mid-size companies.
Catalyst Principal Partners (www.catalystprincipal.com), a private equity firm based in Kenya, has raised $70 million for the fund. Other investors include the African Development Bank, the Commonwealth Development Corporation, Germany’s development finance company DEG and PROPARCO of France.
The fund will invest in growth companies with dynamic management to drive growth, regional expansion, consolidation, and performance improvement. Investments in target companies will range from $5 mn to $15 mn. It will be managed by Catalyst Principal Partners LLC, and aims to invest in Kenya, Uganda, Tanzania, and other East African countries. It will provide financial and management advice to up to 14 mid-size companies across different sectors.
Paul Kavuma, Chief Executive Officer of Catalyst, said: “We anticipate additional substantial commitments in the coming months to achieve our target fund size. We are particularly encouraged by the interest expressed from regional pension funds and insurance companies, noting that we have already received significant capital from reputable local institutions and private investors.”
Jean Philippe Prosper, IFC Director for Eastern and Southern Africa, said: “IFC is supporting this fund to help East Africa’s entrepreneurs gain better access to finance and promote the high growth and dynamic companies that encourage sustainable development and create jobs and new opportunities.”
IFC is the largest global development institution focused on the private sector in developing countries. Investments climbed to a record $18 billion in fiscal 2010.
March 9th, 2011 by Tom Minney
Emerging Capital Partners (www.ecpinvestments.com) has won an award as “Best Private Equity House in Africa” named by EMEA Finance magazine (www.emeafinance.com). This recognizes ECP’s achievements in raising over $613 million for its third pan-African fund, ECP Africa III (AF III), making it the largest fund ever raised for growth equity investing across Africa. It brings ECP’s total assets under management to $1.8 billion.
ECP is praised for committing over $1 billion to diverse investments across all of Africa and impacting growth and development in over 40 countries. It is the second consecutive year ECP won the award.
Hurley Doddy, a founding partner and Co-CEO of ECP said in a press release: “We are extremely proud to receive the award for “Best Private Equity House in Africa” for a second consecutive year. Africa’s profile as a compelling investment story has accelerated in pace over the last two years, so we feel ever more privileged to be held up as the leading firm among our many excellent peers.
“The fact that we were able to raise over $613 million during a time of great financial uncertainty proves that we are certainly not alone in believing in Africa’s potential. Our dedicated focus and extensive presence on the ground adds operational value unrivalled by our peers. We look forward to continuing our success across Africa throughout 2011 and beyond.”
Doddy told Reuters agency in an interview on 7 March that Africa offers plenty of scope for private equity investments, with at least another decade of strong growth expected from consumer goods, broadband internet and financial services. After years of explosive growth in cell phones and banking, he foresees the new growth sectors will also include TV over Internet, insurance and real estate.
Recently, ECP has deployed over $180 million from AF III in 4 investments which provide new services and increase opportunity in 17 countries: Financial Bank, a Togo-based commercial bank with operations in Benin, Cameroon, Gabon, Chad, Mauritania and Guinea; Wananchi Group, a high-speed Internet provider serving Kenya and Tanzania; Groupe NSIA, a West African company providing insurance to Benin, Togo, Senegal, Guinea Bissau, Ghana, Mali, Guinea, Cameroon, Congo and Gabon; and Thunnus Overseas Group, a leading canned tuna provider supplying France with over 25% of its canned tuna products from bases in Madagascar and Cote d’Ivoire.
The group has already made more than 50 investments and 20 successful exits in Africa. Past investments include Nigerian wireless network operator Starcomms and pan-African mobile operator Celtel International, sold to Kuwait’s MTC for $3.4 billion in 2005 before MTNCI was rebranded Zain last year and its African assets were bought by Bharti Airtel. Doddy told Reuters: “Those companies are now quite big. The rates of growth are declining so we’ve been getting out of our last investments in that segment of the telecom business, looking maybe to get in some other segments,” he said.
One such example is Kenya’s Wananchi, a triple-play telecoms firm which bundles broadband internet, cable television and voice telephony into one package and is rolling out its services to 9 east African countries. “A country like Kenya may be over 50% in terms of cell phone penetration but Pay TV, broadband are still at the 1% and 2% type range, so once again we probably have another decade of growth in that type of business,” Doddy said.
He saw further growth in Nigeria’s banking sector, a favourite of frontier market investors, and predicted financial services including insurance would also generate high returns. Changes in land ownership laws would also allow lucrative real estate investments and growth in mortgage lending. Soaring food prices in recent quarters meant investors were increasingly interested in Africa’s agricultural potential, with swathes of arable land that could be put to more productive use. “We’ve seen a real uptake in people looking at agro-businesses here.”
Popular uprisings in North Africa might slow investment in the short term but could unlock the region’s economic potential in future. “Those places had been held back by governance that needed to be changed…I think it is reasonable to expect higher growth rates in North Africa if you look over the next decade.”
He said there was increased interest from Chinese and Indian investors but viewed these as potential co-investors or exit opportunities rather than direct competition.
“If you have a good cash-generative business here in Africa, almost anywhere in almost in any sector, somebody is probably interested in buying,” Doddy said.
The EMEA Finance award is to be presented at annual Achievement Awards charity dinner in London in June.
March 2nd, 2011 by Tom Minney
South Africa’s largest private equity company is transforming itself into a long-term investment holding company and aims to raise ZAR 6 billion ($857.7 million), according to a report on Bloomberg. Brait SA (www.brait.co.za), listed on the JSE Ltd stock exchange (www.jse.co.za), lists its business on its website as “is the raising and management of investment funds that are typically classified as Alternative Assets. The current product-set includes private equity funds, mezzanine debt funds and a range of hedge fund solutions. Additionally, Brait deploys its capital in proprietary investment programmes in these product areas. These investments are made predominantly in South Africa and its region. Investors include leading global and South African institutions.” Bloomberg says Brait manages over $800 mn in 4 funds.
Bloomberg reported a statement to the JSE today (2 March) that the money raised will be used to buy 24.6% of Pepkor Ltd, South Africa’s biggest clothes retailer, which has more than 2,800 outlets in 12 countries under the Pep, Ackermans and Best & Less brands and will use a special purpose vehicle to get exposure of another 10.3%. It will also buy 49.9% and lend R221.2 mn in shareholder loans to Premier Foods, maker of Blue Ribbon bread and Snowflake flour.
The news agency quotes Zaheer Joosub, an analyst at Citigroup Inc: “This is one of those investment opportunities that comes along once every 20 years. It’s a very prudent thing to do.”
Executive director John Gnodde will replace Chief Executive Officer Antony Ball. Christo Wiese chairman of Pepkor and Shoprite Holdings Ltd. will take an anchor shareholding – targeted at 33% – and will become non-executive director of Brait.
The new Brait shareholding is additional to the 20% of Pepkor held by Brait Fund III. The agency quotes Gnodde saying: “We are doing the deals to afford the market an opportunity, through Brait, to get exposure in good, cash companies.” He said the aim was to become a long-term investor. As a private equity firm, Brait would have looked for an exit after about 8 years.
According to a previous company announcement on 13 January, as reported on I-Net Bridge: “International investment group Brait S.A.,Societe Anonyme disclosed on Thursday that the company is considering a potential transaction that may involve a significant equity markets capital raising, the securing of an anchor shareholder, the acquisition of investment assets and an internal reorganisation in support of these steps. The group, that that manages alternative assets, with a focus on hedge funds and private equity, said in a cautionary that the potential transaction remains highly conditional and will require, inter alia, regulatory and shareholder approvals.”
Bloomberg says the offer will be 3 new Brait shares for every 1 held and will open on 15 April 15 and close on 27 May. Shareholders representing 57.41% of Brait’s issued share capital have signed commitments or irrevocable undertakings supporting the transaction.
February 23rd, 2011 by Tom Minney
Leading international private equity firms are investing $79 million to build and acquire mobile phone towers in sub-Saharan Africa. Investec Asset Management (www.investecassetmanagement.com), the International Finance Corporation (www.ifc.org, a member of the World Bank Group), and the Netherlands Development Finance Company (www.fmo.nl) are taking equity in IHS Nigeria Plc (www.ihsnigeria.net) which says it is the largest provider of telecommunications infrastructure in West Africa.
IHS is reported to have more than 2,700 towers under its management and is still expanding its ownership and leasing operations throughout Africa. It has subsidiaries in Ghana, Sudan and Tanzania and employs 800 people, according to the website and is listed on the Nigerian Stock Exchange. IHS Executive Director, Issam Darwish, said in a report on the website that the fund would enhance telecommunications services in the country by breaking current barriers in the sector. Investec made the money available via its African private equity funds. The transaction is subject to regulatory approval.
According to the report, Darwish said: “IHS is dedicated to partnering with operators and investors across the African continent and is thrilled to add the IFC, FMO and Investec Asset Management’s private equity fund to our shareholder base. Since 2001, the company’s core strategy has been to serve the growing needs of the telecommunications operators in Africa and enhance the quality of the network performance.
“The investors understand the unique needs of the growing telecoms sector and the changing competitive landscape. The additional financing package also includes up to $115 million of IFC-led senior debt, mezzanine and syndicated loans, which will allow us to continue our leadership role in providing managed and co-location services to mobile operators and users in Africa.”
Darwish said IHS intended to bring down costs, expand coverage, accelerate technology rollouts and improve the quality of service for subscribers in Africa.
Last October, Nigerian President Goodluck Jonathan had called for more investments in the telecoms sector as Nigeria sought to become Africa’s telecommunications hub.
Yvonne Bakkum, Director Private Equity, FMO, reportedly said: “Access to telecommunications continues to be essential for the economic and social development of Africa. IHS increases the efficiency and quality of existing networks and helps operators accelerate network expansion into rural areas. FMO is proud to contribute to this through our investment in IHS, alongside Investec and IFC.”
IFC is a member of the World Bank Group and the largest global development institution focused on the private sector in developing countries. Andrew Gunther, Senior Manager, IFC Infrastructure and Natural Resources in Africa and Latin America, said: “Broadening access to affordable mobile telecommunications services remains a crucial part of development across Africa. IHS’ track record of improving quality while reducing costs will continue to provide savings that benefit all constituents of telecommunications in Africa.
“With this investment, IFC is helping improve quality of service, expand network coverage, reduce deployment, operating and usage costs – while accelerating the innovation that governments and operators can deliver throughout Africa.”
Investec Asset Management is one of the largest third-party investors on the African continent. It was established in 1991 and has grown into an international business managing approximately $80 billion (end Sept 2010). Mark Jennings, Investment Principal, Investec Asset Management: “IHS has a 10-year track record of profitable growth, is led by an energetic and experienced management team which includes the founders of the business, and is poised for substantial further growth which the new funding will assist. We are pleased to be associated with this dynamic business and team.”
In October 2009, the IFC invested $100 million into Helios Towers Nigeria Ltd. (www.heliostowers.com), set up by Helios Investment Partners as reported on this blog. HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.