Last week in brief... Chocolates, Human Resources, Solar Energy and Machine Learning. All focuses of some of the companies attracting private equity and venture capital financing in Africa over the last week, neatly demonstrating the breadth of opportunity the continent offers investors. But in terms of dollars, the biggest news was made by the infrastructure sector--hardly surprising--and concerned a fund launch.
Pecora Capital, a U.S. Fund Manager based in Boca Raton, Florida, announced plans to raise $2 billion over the next 18 months to invest in infrastructure opportunities in Nigeria. The 7-year fund, which will be domiciled in the Cayman Islands, is targeting returns of 25% and aims to attract commitments from investors across the USA, Europe and Asia. Despite the country's current economic woes, the fundamentals and demographics in Nigeria, in terms of population and infrastructure deficits, all offer huge opportunity and the availability of high returns, according to Pecora's Managing Director, Aaron Smith.
In terms of grabbing headlines, however, the Pecora announcement was pushed into the shade by the appearance of Facebook's Mark Zuckerberg on the African investment landscape. Or to be precise, the Chan Zuckerberg Initiative, the foundation set up by Zuckerberg and his wife Priscilla Chan. It led a $24 million Series B round in Andela, the company that recruits and places African software developers in companies worldwide. Andela will use the capital to fuel growth on the African continent, increasing global firms’ access to the continent’s untapped technical talent. Currently the firm employs almost 200 engineers in its Nigeria and Kenya offices, and has plans to announce a third African country by the end of 2016.
In other fund raising news of interest to those in the north of the continent, NBK Capital Partners, a private equity firm headquartered in Dubai, announced a $110 million first close for its second mezzanine fund garnering commitments from a group of unnamed institutional investors and family offices. The fund, which will invest in companies operating across a number of consumer sectors including healthcare, education and food and beverage, claims a strong pipeline of potential deals and could look to make its first investment within the next few weeks.
Meanwhile, in exit news, Ethos Private Equity agreed to sell Brandcorp to The Bidvest Group in an undisclosed deal last week, ending an almost 8-year stretch of ownership of the company with it took private in 2007 with an investment through the firm’s fifth private equity fund. The deal, which is subject to the fulfillment of certain conditions, follows the conclusion of a competitive auction process. Over the period of its ownership, Ethos has helped management build value through a combination of bolt-on acquisitions and operational improvements.
In the solar energy sector, Energy Access Ventures had made its second investment from its $80 million fund, taking the lead in the second tranche of the Series A round for PEG, an off-grid solar pay-as-you-go company operating in Ghana. EAV’s commitment was $2 million of the $4.3 million raised for the second tranche of the round, which, when combined with the first tranche, sees PEG raising a total of $7.5 million from a variety of investors who included Blue Haven Initiative, Engie Rassembleurs d’Energie and Investisseurs & Partenaires. The capital will be used to expand PEG’s operations in Ghana, build out the firm’s management team and expand into Côte d’Ivoire and its market.
Meanwhile Dataprophet, a South African machine learning startup, has received a capital infusion from Yellowwoods Capital Holdings. While terms of the deal were not disclosed, Ventureburn reports that the transaction gives private equity firm Yellowwoods ownership of a significant portion of the company. The capital will be used by the company to invest in more resources and machines and to help push its international expansion.
And finally, to chocolates. Invenfin, the venture capital arm of Remgro, the Stellenbosch-based investment holding company, is taking a significant minority stake in DV Artisan Chocolate in an undisclosed deal. The business, which was founded by Pieter de Villiers in 2009, is a bean-to-bar chocolate maker, sourcing its cocoa beans directly from African farmers and producing organic, certified, single origin chocolate bars.
In portfolio company news, Bounty Brands, the consumer goods platform backed by private equity investment holding company Coast2Coast has reportedly made four buyouts recently totaling R1.2 billion in value, boosting the company’s revenues closer to its pre-listing goal of R5 billion and R1 billion in operating profit. Bounty Brands is aiming for a dual listing on the London and Johannesburg bourses during 2017. The four acquisitions—food supplier Rieses Food Imports, refuse and carrier bag manufacturer Tuffy, household cleaning products distributor Goldenmarc and fashion brands distributor Footwear Trading—add to Bounty’s portfolio of niche businesses which are already delivering revenues of R3.2 billion and R500 million in operating profit for the three-year old company.
Last month, the Emerging Markets Private Equity Association or EMPEA published the results of its first pan-Emerging markets Currency Risk Management Survey, looking at the impact of currency volatility on the private equity investment industry. The report aims to shed light on how GPs and LPs report and manage exchange rate movements in their emerging market portfolios, including their decisions on when, whether and how to hedge. Well worth a read, we think.
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.