Archive for the 'Venture Capital' Category
January 19th, 2010 by Tom Minney
Agricultural private equity fund Agri-Vie (www.agrivie.com) will reach its target of raising $100 million for investment in agricultural projects by February or March, according to an interview with Reuters newsagency on 14 January. It says there is plenty of potential and plans a second fund of up to $300 million.
Earlier in January the fund, launched in March 2008, made 2 investments totalling $10 mln in 2 agricultural projects in Ethiopia and across the region, and it is close to finalizing a $4 mln investment in Tanzania.
Izak Strauss, executive director and chief investment officer, told Reuters they are also considering a second fund: “There is definitely an opportunity to do a second fund substantially larger than the first fund… probably (in the region of) $200 to $300 million.” This could launch in 2013 or 2014.
Agri-Vie, based in Cape Town, focuses on equity investments in a wide range of agribusiness in Sub-Saharan Africa, including processing and distribution. It is backed by the Development Bank of Southern Africa (www.dbsa.org) and private entities including W.K. Kellogg Foundation (www.wkkf.org).
Agriculture in Africa appears set for transformation from unproductive and undeveloped subsistence farming to more commercial farming as investors from Europe, Asia and the Middle East get large tracts of land and launch projects, often to tackle food insecurity in their own countries.
In the interview, Mr Strauss said Agri-Vie plans to invest up to $25 million into five new projects during 2010, including a new $4 million eco-tourism project in Tanzania.
Agri-Vie forecasts fast economic growth in East Africa, which it calls an “investment hotspot”.
He said Agri-Vie this month invested $6.7 million in New Forests Company (www.newforestscompany.com), a UK-based sustainable and socially responsible forestry company with established, rapidly growing plantations and prospects of diversified products for local and regional export markets. It has operations in Uganda as well as Tanzania, Rwanda and Mozambique. East Africa has been a net importer of sawn timber and electrical poles and NFC aims to replace these imports with locally-produced goods. NFC’s overall aim is to “deliver both attractive returns to investors and significant social and environmental benefits”, according to its website.
The company also invested $3.5 million in africaJUICE (www.africajuice.com), run by European and African entrepreneurs and establishing fruit production and processing operations to capture share in European and the Middle Eastern juice markets. The first farm is in Upper Awash in the Oromia region. africaJUICE claims the combination of ideal growing conditions in the area and Ethiopia’s closeness to target markets should help displace European companies’ reliance on importing fruit products from South America.
The company website says: “We plan to establish at least three production locations across Africa by 2014 and become a premier supplier of Fair Trade juice to the European market.”
Strauss said: “Its first operation is in Ethiopia, growing yellow passion fruit, mango and papaya… The first exports will happen from mid-this year.” africaJUICE is making a capital investment of some €12 million to rehabilitate and expand an existing state-owned fruit farm (“Tibila Farm”) to create a high-technology modern tropical fruit plantation and build a new processing facility, operating under Fair Trade principles.
According to africaJUICE’s website: “Our plan is to plant approximately 600 hectares of yellow passion fruit and 600 hectares of other tropical fruits such as mango and papaya over a period of four years. At the same time we will support the development of over 1,200 hectares of outgrowers (contract farmers) to supplement the supply and extend community participation. Our new fruit processing facility will produce pure juices, concentrates and purees which will be transported to market via established export routes.”
David O’Halloran, Director of africaJUICE, told African Capital Markets News: “Having started operations on the ground early in 2009, we are pleased with the progress so far on the new fruit plantings, infrastructure, operating approach and the processing plant and looking forward to juice production from mid-2010 onwards. We have also made substantial progress following our sustainable development philosophy with a number of initiatives underway or already executed and are excited that this new approach to development and investment is progressing well. We are also progressing well on the second and third projects and expect to be considering funding options for those in the coming 12-24 months”.
November 15th, 2009 by Tom Minney
Aureos Capital (www.aureos.com) at the start of November launched its $400m sub-Saharan private equity fund focusing on small- to mid-market companies. Aureos Africa Fund was launched after feasibility and due diligence studies funded by the Commonwealth Secretariat (www.thecommonwealth.org). It will provide long-term capital and support for promising and successful businesses across the continent.
Aureos has already raised $322.8 mln, a quarter of which came from financial institutions, including European pension funds. It is expected to close fundraising at the end of 2009.
The fund is the largest private equity vehicle targeting smaller African businesses. Aureos targets returns over 20% but charges management fees of 2.25% per year (an industry standard is 2%) to cover the many investment professionals deployed to identify suitable opportunities in Africa.
It has spent $106 mln on nine businesses in financial services, technology/media/telecommunications, fast-moving consumer goods, building products, real estate development and agriculture. The companies operate in more than 15 different countries, reflecting the regional character of most of the portfolio companies.
Sev Vettivetpillai, chief executive of Aureos Advisers, said: “It’s 18 months since we started the fund and we raised a very significant $300m plus for Africa in a very challenging market when most investors were pulling out of financial markets. But Africa is the next frontier market that is going to benefit from emerging market flows.”
Commonwealth Deputy Secretary-General Ransford Smith hailed the fund’s launch. He warned that investment in Africa was “critical” if recent development gains were not to be lost amid the current worldwide recession.
The Aureos Africa Fund makes initial investments of up to $10 mln each in small- to mid-size companies which have a strong potential to expand to pan-African businesses within 2 to 3 years via “buy and build” strategies and through carefully executed organic growth.
September 24th, 2009 by Tom Minney
Emerging Capital Partners (ECP) announced on 22 September it has committed $25 million to Wananchi Group Holdings (www.wananchi.com/), a leading East African media and telecommunications company specializing in pay television and high-speed Internet services in Kenya and Tanzania. ECP is an international private equity firm focused on investing across Africa and this is its 10th investment in African telecoms. It still has stakes in Zain Gabon, MTN Cote d’Ivoire and Cellcom (GSM operator in Liberia and Guinea).
The equity investment will help upgrade and expand Wananchi’s existing network infrastructure to provide East Africa’s first triple-play service, consisting of digital pay television, high-speed Internet and Voice-Over-IP services.
ECP’s CEO Tom Gibian says, according to the website (www.ecpinvestments.com) “ECP has been active in the African telecom sector for nearly a decade. Following on the tremendous growth in African mobile penetration over the last 10 years, we view broadband and related services as the next “game changer” in African telecom. Wananchi’s product offering, network infrastructure and strong management are ideally suited to address the significant unmet demand for media and broadband services in East Africa.” So called “triple play” has been a major driver for growth of telecom companies in developed and emerging markets for the past decade.
Wananchi presently serves the retail and corporate markets in Kenya and Tanzania through its consumer and corporate divisions. The consumer division operates under the Zuku brand and provides cable television and broadband Internet services to residential customers in Kenya using a combination of hybrid-fiber-coaxial and WiMax technologies. The corporate division operates under the SimbaNET brand and is a leading provider of Internet and virtual private network services to corporations, local governments and non-governmental organizations in Kenya and Tanzania using a combination of metro-fiber, WiMax and VSAT technologies.
Cost and infrastructure used to limit East Africa’s pay television and Internet services and penetration rates of cable television and broadband Internet throughout Kenya and Tanzania are less than 1% each. South Africa’s penetration rates for pay television and broadband Internet are approximately 15% and 4% and Mexico’s 24% and 20%. East Africa’s demand is growing, spurred by strong GDP growth, the emerging middle class, and new undersea fibre cables that make services more accessible and affordable.
Regional venture capital fund manager East Africa Capital Partners (www.eacp.co.ke) formed Wananchi Group in 2007 through acquiring several smaller companies. EACP chairman, Mark Schneider, is a leading cable entrepreneur and co-founder of United Global Communications which was acquired by Liberty Media in 2004 and grew to become one of the largest cable companies in the world with operations in over 20 countries in Europe, Latin America and Asia.
Bryce Fort, ECP managing director, says the firm “is looking forward to working with EACP and Wananchi, two of East Africa’s world-class institutions.”
September 22nd, 2009 by Tom Minney
Private equity and venture capital opportunities in Africa, billed “the world’s fastest-growing continent”, are on the agenda of the African Venture Capital Association (AVCA) 8th Annual Conference (http://www.avcaegypt2009.com). The top industry meeting will be held in Cairo Marriott Hotel on 15th-17th November, 2009 with the theme “Africa: The Growth Continent for Private Equity. Investment Opportunities 2010 and Beyond”.
AVCA (http://www.avcanet.com) is a non-profit organization founded to develop private equity and venture capital in Africa. Its Chairman, Rotimi Oyekanmi, says the theme highlights “the significant investment opportunities that abound across Africa. Africa, we believe, is the final frontier where you can still achieve above-average returns.”
Topics addressed by world experts include:
- After the Global Financial Crisis – Opportunities for PE and the Economies across Africa
- Comparisons with other Emerging Markets – Does Africa have the Edge?
- Where are the Opportunities: Which sectors will continue to provide significant returns? What new trends are developing? Do single country investments still make sense vs regional and pan-African investments.
- Investing and Accessing Capital in the MENA Region
- The Fortune at the Bottom of the Pyramid: Will Microfinance change the Banking Landscape?
- Is Africa ready for Specialized Funds?
- Finding the Exit: Delivering Returns in Emerging Markets (case studies from across the continent).
Industries such as financial services, agribusiness and infrastructure and power will be looked at in detail, highlighting the investment opportunities and potential for private equity investors.
According to Ahmed Heikal, founder and chairman of conference co-host Citadel Capital (http://www.citadelcapital.com/): “There has never been a more interesting time for confident investors to venture into our continent.. There are good reasons for the IMF to project Africa will grow faster than any other continent in the coming year.” He says recent IMF statistics show Africa growing at 4.1% in 2010, compared to 0.6% for advanced economies and projected a world average of 2.5% growth.
According to Heikal: “From unique transportation and logistics plays to agrifoods and microfinance, Africa is home to outstanding investment opportunities that build wealth for both investors and the communities in which we do business.
Speakers include fund managers and industry leaders. The conference brings Africa together with markets including the Middle East, Europe and the USA and attendees are likely to include international investors, key African government officials and Africa-focused PE funds, Limited Partners and General Partners. Delegates from 19 African countries and 9 non-African countries attended the 2008 AVCA’s conference in Botswana.
The conference is hosted by:
AVCA: A not-for-profit organization founded to promote the development of private equity and venture capital as an alternative asset class in Africa. The Association has 120 full and associate members from 18 African countries and 9 countries worldwide. Its members have some US$ 5 billion of institutional funds under management. AVCA is committed to promoting high ethical standards of business conduct and professional competence in the industry (http://www.avcanet.com).
FMO: The Netherlands Development Finance Company (FMO) is the international development bank of the Netherlands. FMO invests risk capital in companies and financial institutions in developing countries with the mission to create flourishing enterprises which can serve as engines of sustainable growth in their countries. The investment portfolio is €4.2 billion, making FMO one of the largest bilateral private sector development banks worldwide. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not yet prepared to take. (http://www.fmo.nl).
Citadel Capital: a leading private equity firm in the Middle East and North Africa, focusing on building regional platform investments in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. It has 19 OSFs, controlling companies with investments worth more than US$ 8.3 billion in 14 industries, including mining, cement, transportation, food and energy in 12 countries from Algeria to Ethiopia (http://www.citadelcapital.com/).
August 30th, 2009 by Tom Minney
The International Finance Corporation (IFC), part of the World Bank group, committed investments in the following African countries last year: Angola, Benin, Burkina Faso, Burundi, Cameroon, Chad, Cote d’Ivoire, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Kenya, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Sao Tome and Principe, South Africa, Tanzania, Togo, Uganda, and Zambia.
• IFC invested $18 million to help Green Resources plant 8,000 hectares of new forest in Tanzania. Green Resources will generate carbon credits from its operations, which it will sell directly to buyers from developed countries.
• IFC created a new private equity fund for Africa’s health sector, with the African Development Bank, the Bill & Melinda Gates Foundation, and the German development finance institution DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH. The fund reached a first closing of $57 mln (target $100-120 mln) to invest in small- and medium-sized companies, such as health clinics and diagnostic centers, to help low-income Africans gain access to affordable, high-quality health services.
• IFC provided a financing package of over $200 million to Ecobank Transnational Inc., a pan-African bank with a network of over 500 branches in 27 countries. The financing will support the bank’s expansion, promote lending to micro and smaller, and facilitate trade flows to the region
• IFC provided a $30 million guarantee facility to Stanbic Bank Ghana to help it increase financing to companies that purchase cocoa from small farmers in Ghana.
• IFC will provide a loan of $100 million to Kosmos Energy, one of the key partners developing Ghana’s offshore oil and gas Jubilee field, located in deep water some 60 kilometers off the coast of Ghana. The project will help diversify Ghana’s economy, meet domestic power demand, and generate revenue to support the country’s economic growth and development. IFC’s loan is part of a $750 million debt package for U.S.-based Kosmos that IFC helped mobilize, primarily from commercial banks. IFC also signed a $115 million loan agreement with British Tullow Oil, another key Jubilee partner, bringing IFC’s support for the project to $215 million. Kosmos and Tullow are independent oil and gas exploration and production companies.
• In Uganda, IFC signed its first risk sharing facility involving small and medium enterprises in the telecommunications sector. This project enables distributors of Zain products and services access to medium term financing through Stanbic Bank Uganda. IFC expects to see more projects of this nature in other parts of Africa.
• IFC provided $100 million in financing as part of a $400 million package to support Standard Bank’s trade-related lending in Africa. The transaction was part of IFC’s Global Trade Liquidity Program, which is expected to support up to $50 billion in trade in emerging markets and have a significant impact in Africa, where supporting continued access to finance is one of IFC’s priorities.
August 30th, 2009 by Tom Minney
The International Finance Corporation (IFC) announced that it committed to $1.8 billion worth of new investments across 30 countries in Africa in the fiscal year ended June 2009. The private sector investment arm of the World Bank Group rapidly increased activities to alleviate the impact of the global financial crisis on Africa’s poorest regions.
IFC earlier announced in May it is teaming up with other international financial institutions to mobilize at least $15 billion over the next 2 to 3 years to lessen the impact of the global financial turmoil on Africa. IFC will contribute at least $1 billion to promote trade, strengthen the capital base of banks and promote microfinance lending, and increase lending for infrastructure projects and other real sectors of the economy experiencing a shortfall in liquidity.
The 2009 commitment is 32% more than $1.4 bln in commitments (FY08), and the largest volume since its founding in 1956. IFC also delivered $26.1 mln worth of advisory services (up from $18.6 mln) as it expanded activities to have more impact in countries affected by conflict and where the private sector is at the very early stages of development.
According to an IFC press release (www.ifc.org), Jean Philippe Prosper, IFC Director for Eastern and Southern Africa says: “IFC stepped up financing and advisory services amid the turmoil in global financial markets to encourage African trade and investment flows and alleviate the impact of the global economic slowdown on the Africa’s most vulnerable.”
IFC continued to extend its regional reach in Africa to countries where it has traditionally been less active. IFC last year committed its first investment in Sao Tome and Principe, which became an IFC member state in October 2008, and opened new offices in the Central African Republic and Ethiopia (May 2009).
IFC’s strategy in Africa is based on three main components: improving the investment climate, enhancing support to small and medium enterprises, and developing new projects to support investments. IFC is also focusing on building infrastructure, advancing health care, developing agribusiness, reforming the investment climate, and promoting the recovery of countries affected by conflict.
August 29th, 2009 by Tom Minney
Aureos Capital announced on 25 August that Aureos Africa Fund has increased its funds under management to US$317.8 million. The fund initially closed in September 2008 and is listed on the website (www.aureos.com) as having $253.5 million. It expects a final close by mid-December 2009.
Aureos Capital is a private equity fund manager investing in small to mid-sized businesses in emerging markets.
The Aureos Africa Fund invests across several sectors, countries and transaction types. It targets opportunities where Aureos sees potential for above- average growth via regional expansion. It makes initial investments of up to US$10 million in small to mid-size companies with a strong potential to expand to pan-African businesses within 2 to 3 years via “buy and build” strategies and/or through carefully executed organic growth.
The Fund has so far made 9 investments including in financial services; technology media telecommunications; fast-moving consumer goods; building products; real estate development and agri-business. The companies operate in more than 15 different countries, reflecting their regional expansion.
First investors were international finance institutions (IFIs) and US-based private sector investors. Recently European pension funds, family offices, commercial banks and European Development Finance Institutions have committed funds.
Sev Vettivetpillai, CEO of Aureos Advisers Ltd, said: “Despite the global economic slowdown, we are seeing continuous economic growth in Africa and foreign direct investment seems to be picking up providing a vibrant economic platform for building a well diversified portfolio of sustainable companies in the SME segment of the market. We were confident that the Aureos track record was of great interest to investors who had appetite for investing in Africa”
Davinder Sikand, Regional Managing Partner of Aureos Africa, adds that small and medium-sized businesses are key players in domestic demand and supply chains, which make them very well-placed to achieve critical mass and pursue regional growth strategies: “We are building an exciting investment portfolio across the African continent. This clearly demonstrates Aureos’ business model to partner with leading mid-market companies and to build sustainable first-rate regional businesses through both organic growth as well as M&A driven strategies.”
“We are beginning to develop relationships between portfolio companies at opposite ends of the continent – which we see as a first step towards building pan-continental businesses that will truly capitalise on the enormous opportunities on the ground in Africa today”.
Aureos’s successful track record of investing in Africa includes its regional funds in East, West and Southern Africa, which were launched in 2003 and between them have invested $140 million in 34 investee companies.
Meanwhile news reports say that Aureos has paid R66 mln ($8.5 mln) to increase its existing 10% stake in technology service provider Sandbox (www.sandbox.co.za) to 39%. The transaction was funded through the $254 million Aureos Africa Fund and the $50 million Aureos Southern Africa Fund. In 2008, the Southern African Fund bought 10% of Sandbox from the founding shareholders and Aureos simultaneously funded a 21% empowerment stake. The latest deal sees Sandbox management gaining 20%.
Aureos SA managing partner Ron den Besten is quoted as saying: “We believe that Africa has fantastic and exciting growth potential, despite the downturn in global markets. With Aureos’ networks throughout Africa and the emerging markets, we will be able to add significant value to the business.”
Sandbox was founded in 1998 and focuses on enterprise resource planning, customer relationship management, enterprise compliance, enterprise intelligent building management and integration, high-definition large-scale electronic and video surveillance, enterprise security and allied enterprise active audio visual systems. It operates in SA, the Middle East and the UK.
Paul Wootten, a Sandbox founding shareholder and current CEO, is reported as saying the Management Buy Out is part of the company’s growth strategy: “It is imperative senior management and, ultimately, all staff share in the financial performance they are called upon to deliver.” Sandbox’s strategy is to boost existing organic operations with strategic and complementary acquisitions, leveraging its current R350 mln ($45mln) turnover.
July 30th, 2009 by Tom Minney
Emerging Capital Partners (ECP) announced on 27 July it has bought controlling stakes in Shoresal and Almes – both North African construction companies – for a total USD $26.2 million. ECP (www.ecpinvestments.com) is an international private equity firm focused on investing across the African continent with a nine-year track record and the first to raise more than $1.6 billion to invest in companies across Africa.
It is expanding its North African investments.
Thomas Gibian, chief executive officer of ECP, says: ”ECP has invested in various African engineering and construction companies since 2006, and we have long been evaluating opportunities in the North African market…Unlike many western markets, North African real estate and construction is generally driven by a lack of supply to meet the increasing demand from both foreign and domestic companies.”
In Algeria, ECP acquired a $13.8 million stake in Shoresal, a real estate development company, which will use ECP’s investment, in part, to finance the development of a 14-storey Class A office tower in the Bab Ezzouar business district of Algiers. According to the company’s research, demand for office space in Algeria’s major cities is approximately eight times greater than the current supply, driven by a tripling in the number of multinational companies since 2000.
The investment was made through ECP’s MENA Growth Fund LLC, which was established in September 2007 to capitalize on investment opportunities throughout the Middle East and North Africa.
In Morocco, ECP invested $12.4 million in Almes, the holding company of Entreprise Marocaine de Travaux (EMT) and Somadiaz. EMT specializes in public works infrastructure projects such as dams, levees and airports. Somadiaz is an equipment leasing company that provides specialized equipment to commercial and industrial clients. The companies will expand in Morocco and into neighbouring countries – such as Libya and Mauritania – where demand for public works and other construction services are also high. ECP’s investment is in partnership with Alliances Développement Immobilier, a leading integrated real estate and tourism group in Morocco.
The investment in Almes was made through the Moroccan Infrastructure Fund, a joint venture between ECP and Attijariwafa bank, which was established in December 2006 to capitalize on the ongoing reforms that are spurring economic growth in Morocco. It targets numerous sectors including telecoms, transportation, energy, power and water.
“ECP views the construction markets across North Africa as uniquely poised for growth,” said Vincent Le Guennou, executive vice president of ECP. ”We believe the strong supply and demand imbalance in the sector is a compelling reason to invest.”
July 24th, 2009 by Tom Minney
West African private equity fund manager African Capital Alliance (ACA) announced the first closing after raising US$200 million for Capital Alliance Private Equity III (“CAPE III”) fund. The fund targets opportunities in sectors such as financial services, oil and gas, power (electricity) supply, communications, manufacturing and services in Nigeria and the West African sub-region. The aim is to raise a total of $350 million.
Investors in CAPE III include international development finance institutions such as CDC Group, the European Investment Bank, the International Finance Corporation, and Netherlands Development Finance Corporation. Nigeria-based institutional investors including First Trustees Nigeria Plc, AIICO Insurance Plc, Africa Re-insurance Corporation and some high net-worth individuals have also made commitments. CDC Group, an emerging-markets fund of funds backed by the UK Government, announced that it had committed $50m to CAPE III.
CAPE III will seek to acquire significant interests in companies with high growth potential and up to 40% of the fund may be invested in companies in the energy sector. Economic reforms and liberalization in Nigeria and other West African markets, a scarcity of capital, and relative availability of attractive assets have created unique private equity investment opportunities.
CAPE III is the latest private equity fund sponsored by ACA since its launch in 1997. ACA currently manages over $500 million of aggregate capital including a $170 million real estate fund launched in 2008. Having concluded the first close of CAPE III in May 2009, ACA is targeting a CAPE III final close with aggregate commitments of $350 million. ACA mobilizes long-term capital from institutional investors to promote private sector led investments.