Last week in brief… Once again, private equity fund raising hogged the limelight in Africa's private capital markets last week. It seems the continent is in step with the global trend in fund raising, which has got off to a quick start this year. While a nice challenge, how and where to put all this fresh capital to work is sure to press on the continent's investment professionals.
The biggest fund announcement of the week referenced a final close that took place at the end of February. The Momentum African Real Estate Fund or MAREF, a joint venture between Momentum Global Investment Management and Eris Property Group, landed a total of $170 million in commitments from eighteen investors including pension funds, institutions and family offices.
The fund, which was launched in 2014, is targeting a net IRR of 18% for its investors by building an investment portfolio of office blocks, shopping malls and warehouses in sub-Saharan Africa, excluding South Africa. So far, the fund has made three commercial real estate investments in Mauritius and Ghana which between them represent a commitment of some 23% of the fund’s capital. MAREF aims to make between three and five investments annually over the course of its investment life span, typically deploying $30 million to $50 million in capital for each deal.
Danish private equity firm Frontier Investment Management has held a $116 million first close for its second fund. Several European development finance institutions made commitments to the fund as well as a foundation and a number of ultra-high net worth investors. Of the DFIs, the UK’s CDC and European Investment Bank’s GEEREF, are re-upping from the first fund, while FMO, Proparco, Swedfund and the Development Bank of Austria are participating for the first time.
Frontier Energy II hopes to end up with $200 million for its planned final close in early 2018. The new fund will back greenfield renewable energy projects across the sub-Saharan region, with a goal to its investors an IRR in excess of 20%.
Cauris Management, a private equity fund that predominantly backs opportunities in francophone West Africa, is part of the winning Yeelen Capital Consortium that has been selected by the West African Development Bank to raise and manage the Yeelen Financial Fund. The planned €150 million fund will focus on financial services sector opportunities in the WAEMU region.
Yeelin Capital, the fund’s manager, will be staffed by an investment team from Cauris Management, led by Benjamin Kouakou, a Partner and director of the firm. As well as investment services, the team will provide the fund manager with ESG support reporting and back office services. Yeelan Financial Fund’s strategy will be to make investments ranging from €2 million up to €11 million in size in companies at all stages of development in the counties in the WAEMU.
Meanwhile Incofin, a Belgian investment management firm that advises and manages funds that back microfinance institutions in developing countries, has announced additional commitments from new investors, enabling the fund to reach $140 million in aggregate capital in an interim close. The new investors, which count AXA Investment Managers, KBC Pensioenfonds and Korys among their number, have committed an additional $27 million between them to the third-generation fund, which was launched in 2015.
The final piece of fund raising news concerns an equity commitment to a new fund by the IFC. The DFI’s Board of Directors is expected to meet in the middle of May to consider a potential capital commitment of $25 million to LeapFrog Emerging Consumer Fund III, LeapFrog Investment's latest fund which will look to back mid-market growth capital opportunities in Africa as well as South and South East Asia.
Actual transactions, while sparse, were interesting, nonetheless. African Rainbow Capital is taking a 20% stake in A2X Markets, the nascent South African stock exchange. While terms of the deal were not disclosed, ARC has an option to expand its holding bu another 5% once A2X secured its exchange licence. Hardly had the deal been announced before that milestone was achieved. A2X, which is one of three new stock exchanges launching in South Africa this year, aims to become operational in the final quarter of 2017.
After 40 years, Centum Investments is exiting its stake in Kenya Wine Agencies Limited or KWAL in an undisclosed deal. The Kenyan investment firm is selling its 26.43% stake in the wine and spirits manufacturer and distributor to South Africa's Distell Group. Centum first backed KWAL in 1977 since when the company’s enjoyed steady growth. In 2016, KWAL sold more than 8 million litres of alcoholic beverages and today, its portfolio of brands includes several well-known names including Kibao, Kingfisher and Caprice.
And Kibo Capital has made its first PIPE deal for its second fund, acquiring a stake in the Rwandan business of long term partner, I&M Bank. The transaction, which took place via an IPO on March 31st on the Rwandan Stock Exchange, was more than twice oversubscribed by a pool of local and international investors. Kibo Fund II’s investment, whose size remains undisclosed, was apparently the largest of the offering.
Will the Trump Presidency be good for Africa? In a piece for New African Magazine, Aubrey Hruby argues that, contrary to expectation, the Trump Administration might be a blessing in disguise for the continent. She believes that there's a strong possibility that relations between Africa and the USA might take on an even greater importance during its term in office.
And finally, the Financial Times writes about high-profile financial services investor Atlas Mara's plans to regain the initiative. Macroeconomic factors and adverse currency shifts have pummeled Atlas Mara’s profits in the last year, but through a combination of cost savings and a focus on fintech opportunities, the company is looking to double its earnings in the coming year.
As always, you can review these and other stories by clicking through to this week’s complete issue of Africa Capital Digest.
Allan Cunningham is a senior media executive who has spent the last 15 years of his career working for some of the world’s most respected M&A and Private Equity media companies including Dow Jones’s publications Private Equity Analyst and VentureWire and most recently, The Deal. He has built a number of successful digital and event content businesses, both subscription and sponsor-supported, delivering information and content-marketing services to clients in the M&A and broader deal ecosystem. He recently struck out on his own and launched Rowayton Press, a multi-platform media company focused on the private capital opportunities in emerging and frontier markets. Mr. Cunningham holds a Bachelors degree from Liverpool John Moores University in the UK.