Last week in brief… Fundraising news for Africa-focused or Africa-related private equity funds attracted a lot of attention last week. But then, so did news of a maiden African investment by a significant US-based private equity firm. Compared to the previous couple of weeks, there was a lot of activity to report.
Let's start with the private equity firm and its maiden Africa deal. The firm in question is TA Associates, a global growth investor headquartered in Boston which announced it has acquired a minority stake in Interswitch, the Nigerian digital payments company, from Helios Investment Partners in an undisclosed deal. Founded in 2002, Interswitch enjoys significant market share in Nigeria, owning and operating Verve, the country’s principal domestic credit card scheme, and serving as a third-party transaction processor for many of the country’s largest banks.
As part of the deal, Ajit Nedungadi, TA Associates’ Managing Partner and Naveen Wadhera, a Managing Director join the company's Board of Directors. As well as capital, TA Associates brings extensive digital payments domain expertise and global networks to Interswitch, having previously invested in several payments companies worldwide.
On to fund raising, there was one launch announcement and two significant closes last week. The launch announcement sees Mediterrania Capital Partners kick off fund raising for its third fund, looking to raise €250 million to invest in companies in North Africa as well as a select number of sub-Saharan countries. MCP III is a significantly larger fund than either of its two predecessors, which received commitment from a range of global institutions including pension funds, fund-of funds, family offices and development finance institutions. The new fund is targeting an IRR in excess of 25% from investments in companies that look set to benefit from the growth in the spending power of Africa’s rapidly urbanizing middle class.
The biggest fund close of the week came from Actis who managed to hit the $2.75 billion hardcap for its fourth energy fund in record time. The fund, which was significantly oversubscribed, will invest in select countries in Latin America, Africa and Asia, building four regional platforms, one of which, Azura, has a pan-African focus. Much larger than its predecessor fund, Actis Energy 4 was raised by the firm's in-house team, with a number of sizeable reups as well as new commitments from a diversified investor base of pension funds, insurance companies, endowments, sovereign wealth funds and other global institutional investors.
In the other fund close story of the week, Apis Partners, a private equity asset manager that targets growth capital opportunities in financial services companies in Africa and Asia announced the final close for their first fund, handily beating their $250 million target with $287 million in commitments. Apis Growth Fund I will target investments that need between $20 million and $40 million of capital, with a particular focus on financial services investments that help improve financial inclusion in Africa and Asia. The 10-year fund has already deployed $130 million in capital in 5 deals since it held its first close in August 2015, and expects to add another 5 investments to the fund’s portfolio over the next couple of years.
For the smaller end of the deal spectrum, the Accion Frontier Inclusion Fund, managed by Quona Capital, announced that it has received commitments totaling $141 million for its final close, held last week. The fund will target investments in small, innovative companies that aim to provide financial services to underserved consumers and businesses.
In other deal news, an investor consortium made up of CDC, the IFC, Maris Capital and Mbuyu Capital Partners are jointly investing $48 million in Africa Logistic Properties, a newly-established developer and manager of Grade A warehousing. The capital will be used to support the company’s warehousing developments in Nairobi. In committing $25 million to the deal, CDC is providing the lion’s share of the investment. The IFC is investing $10 million in the deal, with Maris Capital providing $8 million and Mbuyu Capital Partners committing up to $5 million.
Sea Harvest, the South African fishing company majority-owned by Brimstone Investments, is looking to raise up to $100 million by floating 38.7% of its share capital on the Johannesburg Stock Exchange. The date of the listing has been set for March 23rd. The proceeds of the listing will be used to pay down debt and fund the company’s acquisition strategy as it seeks to become a global diversified seafood business. Earlier in the year, Brimstone had expanded its holding in Sea Harvest to 85% by acquiring Kagiso Strategic Investment’s stake in the company in a deal valued at R270 million, (approximately $20.5 million at today’s rates). Following the listing, Brimstone still plans to retain a majority stake in the company.
Making its fourth investment on behalf of the Fund for Agriculture Finance in Nigeria or FAFIN, Sahel Capital is teaming up with CardinalStone Capital Advisers to acquire an undisclosed stake in Crest Agro Products, an integrated cassava processor. The capital will be used to support the establishment of the company’s starch processing facility as well as help expand its farming activities.
Meanwhile, in Egypt, the African Finance Corporation is backing Carbon Holdings, a privately-held Egyptian petrochemicals company, with $25 million in a quasi-equity deal. The capital, which is being invested alongside capital commitments from the IFC and Gulf Capital, will be used by Carbon Holdings to expand its operations.
There were a couple of other DFI-related items last week. Once again, Africa Finance Corporation featured, announcing the successful $350 million financial close for an 80MW peat-to-power project in Rwanda’s Gisagara district. AFC is the Mandated Lead Arranger for the project's debt, which was also supported by Finnfund, Afreximbank and others. And DEG, the German DFI announced a $7.6 million investment in Retailability, a retailer of low price fashion clothing and footwear to a young customer demographic, with a chain of 200 stores in Southern Africa.
Finally, some interesting perspective was on offer in other publications. Euromoney finds that a lack of fintech innovation and funding coming into the continent to support a sustained level of fintech growth is forcing Africa’s banks and telcos to play a much bigger role in the development of technologies than in the US and Europe. And Africa’s economics and changing consumer patterns are fueling considerable interest in real estate investment opportunities from many European institutional investors, but not all. Investments & Pensions Europe takes a look at this market, its opportunities and challenges.
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.