Last week in brief… An exit and portfolio company deals were the main features of private equity activity in Africa last week. And not a fund raising announcement in sight, which, as you know, was unusual as far as 2017 is concerned.
First the exit; GetSmarter, a provider of online executive education courses, has been acquired by US edutech company 2U for $103 million in cash, handing the company's founders, Sam and Rob Paddock, and their one investor, DiGAME, a full exit. The Cape Town-based company, which was launched in 2008, has been largely bootstrapped, only taking in $5 million in funding from DiGAME in 2016.
The deal included an earnout of $20 million for the company's founders and management, all of whom are staying with the company. GetSmart, has served over 50,000 students in 150 companies, generated $17 million in revenue in 2016, having been very successful at increasing the rate of new client acquisition. The deal is expected to close in early July.
In portfolio company deals, The Twinsaver Group is making its second acquisition of 2017, buying Sylko, a 70-year old supplier of disposable and recyclable household products. The move is the latest in Ethos Private Equity-backed Twinsaver’s strategy to expand its business and position itself as a large-scale FMCG business. It’s expected that the takeover will allow for further capital investment in the company’s technology and product development initiatives, helping to expand its share in South Africa and other African countries.
In February this year, Twinsaver acquired Validus Medical, a manufacturer of disposable hygienic products, in an undisclosed deal. According to the company, it has also made investments of R580 million (approximately $43 million) in production equipment recently, a reflection of the opportunity offered by South Africa’s pulp and paper manufacturing sector which the firm sees as topping R28 billion or approximately $2 billion in size.
The other portfolio company-related items concern joint ventures. In the first, Helios Investment Partners has teamed up with GBfoods, a multinational food company headquartered in Barcelona to form one of the continent’s largest FMCG businesses. GBfoods Africa Holdco, as the joint venture is called, is made up of assets acquired from several Africa companies. They include brands such as Jumbo, Gino and Pomo and Jago as well as the distribution rights on the continent for Bama, a mayonnaise product provider. Terms of all these deals have not been disclosed.
And in the second, CDC, the UK's development finance institution, announced the launch of a new power platform in partnership with the Aga Khan Fund for Economic Development and its industrial and infrastructure arm, IPS. Initially, CDC will invest $70 million in the partnership, followed by another $70 million later. The new platform will house IPS’s existing power projects in Kenya and Uganda and will look to expand its portfolio of assets by backing new projects in greater East Africa, including the Democratic Republic of Congo, Mozambique and Madagascar, and West Africa.
In other deal news, Universal Partners, a listed investment holding company registered in Mauritius, is investing £15 million, (about $19.5 million), in Dentex Healthcare Group, a UK-based dental partnership. The deal is structured as a combination of equity and convertible debt, with £4 million securing an initial 36% stake in the company and the balance of £11 million being provided as a convertible loan subscription which has an 18-month draw down facility. Universal has the right to convert the loan notes into ordinary equity and increase its stake to 49%.
At the smaller end of the deal spectrum, Cars45.com, an online marketplace for pre-owned vehicles, has landed $5 million in funding for its Series A round from Frontier Car Group, a holding company which counts Balderton Capital, EchoVC, NEA and TPG Growth among its backers. The capital will be used to further improve the Nigerian company’s online platform.
In company moves, a couple of U.S.-based law firms made Africa-related announcements last week. As part of its expansion of its Project Finance practice, Covington and Burling is planning to open an office in Johannesburg. The new office will be led by Ben Donovan who joins Covington from Chadbourne and Parke, which is soon to complete a merger with Norton Rose Fulbright. He is one of several Chadbourne lawyers joining the practice, who include Agnieszka Klich, Richard Keenan, David Miles and Chadbourne’s Dubai head, David Greenwald.
Manatt, Phelps and Phillips is giving its Africa and MENA practice a boost with the appointment of Kalidou Gadio as Partner and practice Co-Chair. He joins the U.S. law firm from the African Development Bank, where he served as General Counsel. He will be based in the firm’s Washington, D.C. office and will work closely with Manatt’s Africa and MENA practice co-chair, Douglas Boggs.
We found a couple of interesting perspective pieces to review. Forbes has a report which reviews some of the American-based renewable energy companies who are setting up in Africa and examines the factors driving the trend.
And in a Q&A piece, Shaka Kariuki, the Kuramo Capital Partner who is now Chair of Transcentury. He outlines the details of the deal and strategy for the NSE-listed firm.
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.