Last week in brief...We kick off the new year with an investment for a recently closed fund. Since our last issue of 2018, Emerging Capital Partners announced its deal for Kenya's Artcaffé Group. Having held the final close for their fourth pan-Africa fund at the end of last year, the private equity fund manager is acquiring a significant majority stake in the business, which now operates 26 stores throughout Nairobi. The deal should help the Group achieve its expansion plans - along with capital, ECP brings a track record of successful value creation in the sector, following its three-year ownership of Java House, a period which saw a dramatic growth story for the business.
While the ECP deal might not have been the largest transaction in dollar terms, we suspect that the next deal was. The terms remain undisclosed, but the project needs significant amounts of capital. Actis has acquired the equity interests of a couple of investors in Kipeto Energy, helping the Kenyan Wind Power Project reach financial close. They now have an 88% equity interest in the project, which is just about to start construction. IFC InfraVentures and African Infrastructure Investment Managers, who both supported the project's planning and development stages, now have their exit.
The Carlyle Group has made its thirteenth investment for its $698 million sub-Saharan Africa Fund, which is now almost fully deployed. They're investing $40 million in Wakanow.com, a Nigerian online travel agency, which gives them a control stake in the business. Wakanow has grown into one of West Africa’s largest full-service online travel companies, offering customers the opportunity to make one-stop reservations for flights, hotels, holiday packages and other travel services through its online portal.
In a similar sized deal, Inspired Evolution is leading a consortium of investors backing d.light, a solar power and products company. Between them, the consortium are investing $41 million of equity,which, as well as bringing the total amount of equity and debt raised by d.light to exceed $100 million, allows some of the firm’s earliest investors to exit their investment.
Morocco-based CDG Capital Private Equity is acquiring a stake in one of the North African country’s office furniture manufacturers and distributors. The deal for Trarem Afrique is the third investment for the investor’s Capmezzanine II SCR, a generalist fund. The fresh capital will be used to support Trarem’s growth plans and its shift to selling more project-based, customized solutions rather than ad hoc, off-the-shelf, catalogue-driven sales.
The largest piece of fundraising news was also to be found in North Africa. EFG Hermes Private Equity held a first, oversubscribed close for the Egypt Education Fund after just 6 months on the fundraising trail. The fund, which forms part of EFG Hermes’ private education joint venture with Dubai-based GEMS Education, has received commitments of $119 million, handily beating its initial target of $50 million to $100 million. Ultimately, the fund is looking to raise $150 million to invest in Egypt’s K through 12 sector, which it expects to achieve this year.
MENA-focused venture investor Wamda Capital is reportedly launching the raise for its second fund early this year. Fares Ghandour, one of the firm’s Partners, is quoted as saying that the new fund would pursue a similar strategy to that of its $70 million predecessor, which is now 80% deployed. From a regional perspective, the majority of investments will still centre on the MENA region, but the fund will also look for opportunities in Turkey and Pakistan, as well as across Africa. Wamda has already made its first foray into sub-Saharan Africa, leading a deal to back Kenya's Twiga Foods in mid-2017.
In company news, after months of signalling, Standard Chartered has finally found a buyer for its private equity business. The new owner of StanChart's private equity asset portfolio is ICG Strategic Equity, who are paying $1 billion for a group of some 35 businesses. As part of the transaction, the Bank's former private equity team have been spun out and set up as Affirma Capital, an independent private equity fund manager. They'll continue to manage the portfolio and invest a $400 million of fresh capital provided by ICG in new and follow-on deals.
One of Carlyle's sub-Saharan fund assets has been the subject of a merger since our last issue. Nigeria’s struggling Diamond Bank has agreed to to sell itself to Access Bank, one of the country’s leading financial institutions in a deal estimated to be worth $200 million. The transaction sees Access acquire all of Diamond Bank’s issued share capital in exchange for a combination of cash and stock.
It seems likely that Carlyle will have taken a significant hit on the investment having originally backed Diamond Bank in 2014 with $147 million in exchange for an 18% stake. They have to hope that their new stake in what will be Nigeria’s largest lender will benefit from a country’s economy that is starting to grow again and the significant levels of untapped demand for credit will all combine to boost their returns.
Finally, former Africa Finance Corporation CEO Andrew Alli has taken up a new role. He's joining SouthBridge Group, an Africa-focused financial advisory firm founded by Donald Kaberuka and Lionel Zinsou a couple of years ago. As their new CEO, he'll focus on replicating his success at AFC and expanding the business. He's credited with building the nascent DFI into a robust institution targeting Africa’s infrastructure, natural resources and heavy industry sectors during his decade-long tenure at the helm.
That's it for this week. As always, you can review these and other stories by clicking through to this week's preview edition of the newsletter.
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.
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