Last week in brief… Metier, the private equity fund manager, saw two of its funds make their first investment forays into East Africa last week. The first, a consumer deal, is a joint investment, with the South African fund manager teaming up with fellow private equity investor, Amethis Finance, to take a significant minority stake in Kenafric Industries, a major FMCG group in Kenya. The transaction is limited to Kenafric’s confectionery and culinary business, with the Group's founding family, the Shah's continuing to operate the company's other business lines separately.
Metier's second east Africa deal was in the renewable energy sector where the firm led an investment of $19.4 million in debt and equity from a consortium of investors. The beneficiary is the Sindila Hydropower Project, a 5.25MW run of river development in Western Uganda. With an 87% stake, Lereko Metier Sustainable Capital is the largest shareholder in the consortium, which also counts KMRI USA, the project’s original developer, WK Power, Fieldstone Africa Investment Resources and the United States development finance institution OPIC as part of its membership.
The biggest Africa-related deal of the week involved Kinnevik AB, the Swedish investment management firm, and Rocket Internet, the publicly listed internet investor which owns a stake in Africa Internet Group, the parent of Jumia. Kinnevik is selling half its stake in Rocket Internet via an accelerated book build, and the offer will earn the investment company approximately $220 million in gross proceeds. Kinnevik first backed Rocket Internet in 2010, since when, according to Bloomberg’s Gadfly column, the investment has generated an annualized internal rate of return of 91%.
In fundraising news, South African investment firm Ethos has launched the capital raise for Ethos Mezzanine Partners 3, targeting $150 million at final close. The generalist fund, which will invest in mezzanine and quasi-equity growth, acquisition and replacement financing opportunities in companies in southern and sub-Saharan Africa, will look to make between two and five investments a year, ranging between $5 million to $30 million in size and return an IRR in the mid-teens. A first close is expected to be held around about the end of March or the beginning of April.
There were a couple of financial services sector deals announced last week, one insurance and the other, Fintech. In the first, Capitalworks announced that it is acquiring insurance giant Aon’s shareholding in 10 employee benefit, insurance and reinsurance brokerage operations in several sub-Saharan African countries. Once established, the new entity will be Aon’s largest exclusive global network correspondent on the continent.
In a fintech deal, Tala, a Los Angeles-headquartered mobile technology and data science company with operations in East Africa and Southeast Asia, has raised a $30 million Series B round from a consortium of investors led by one of Sand Hill Road’s leading venture capital firms, IVP. The capital will be used by the firm to accelerate product development, expand into new markets build its team of associates. Tala's mobile app technology for Android aggregates more than 10,000 data points on a customer’s mobile device and build’s a customized credit score for that individual, before allowing the customer to apply quickly for credit and receive an instant decision and offer. The credit is then disbursed directly to the customer’s mobile accounts who then repays their loans directly from the app.
South African private equity firm Medu Capital has acquired a 15% stake in Hero Telecoms for $5.75 million. The fresh equity capital will be used to fund the company’s ongoing acquisition plans. Since being established in 2014 with the objective of consolidating the fragmented Wireless internet Service Provider (WISP) market, Stellenbosch-based HeroTel has acquired a total of 10 WISPs and is reportedly working an additional two potential acquisitions currently.
A debt deal from December 2016 rounds out Africa's transaction news for the week. It was announced last week that Helios Credit Partners has agreed to provide Trustco with a $40 million financing facility which will be used to capitalize the conglomerates's growth in Namibia’s property sector. The deal brings the total amount of capital secured by Trustco over the prior six months to $77 million.
Reuters reports that Bidcorp could tap as much as R1.2 billion for M&A deals in the future, quoting comments made by the company's CFO on a recent earnings call. The strategy could help some private company investors achieve exits, with Bidcorp's CEO Bernard Berson indicating that the most likely targets would he family-owned or private equity-backed food-service groups.
Finally, Business Day reports that while global mining deal volume fell 9% year on year in 2016, Africa’s mining industry bucked the M&A trend, growing by 62% to almost $6 billion in the same time frame. The findings are taken from EY’s latest quarterly report on mergers, acquisitions and capital raising in the mining and metals sector.
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.