Last week in brief... Potential exits featured strongly in a couple of Africa's private capital deal stories last week. And there was talk of a merger of the operations of two telcos as a first step toward an outright acquisition of one by the other. These all featured some of the continent's larger private equity portfolio companies.
The exits involve planned IPOs, the market for which has seen a burst of activity in the last few weeks. The larger of the two relates to Vivo Energy, a fuel company operating Shell-branded gas stations selling Shell’s fuels and lubricants across Africa, which pans to list in both London and Johannesburg in May. Helios Investment Partners holds a 44% stake, first backing the company in 2011 in a $1 billion deal in partnership with Dutch firm Vitol.
Should the IPO go ahead, it's estimated that the flotation will value Vivo between $3 billion and $4 billion dollars and allow both Helios and Vitol the opportunity to cash in a portion of their stakes.
The second possible listing concerns The Abraaj Group's Libstar. Again, if things proceed as planned, it would allow a partial exit for Abraaj, who first backed the South African food and personal care business in late 2014 via its $990 million sub-saharan fund. All signs point to a good return for Abraaj and its fellow shareholders. Since then, the company's revenues and EBITDA have posted above 20% CAGRs.
Another Helios investment is rumored to be planning a deal...according to Reuters, Telkom Kenya and Bharti Airtel are reportedly considering a merger of their operations in Kenya as a precursor to a Telkom acquisition of all of Airtel's local assets. The move is thought to be part of a broader strategy to challenge Safaricom's market leadership. But so far, no formal application has been made to the market regulator, and both companies declined to comment.
Little Green Beverages, the producer of South Africa's range of Refreshhh! soft drinks which is owned by Ethos Private Equity and Nedbank Private Equity, has agreed to buy SoftBev in an all cash deal. At a minimum, the deal values the soft drink producer and bottling company at R563 million or $46.5 million, an amount that could rise depending on the EBITDA that SoftBev achieves for its 2018 fiscal year. That falls at the end of June.
The sellers of the business are Bowler Metcalfe, a JSE-listed plastic packaging manufacturer which holds a 41.38% interest in the firm, as well as SoftBev's founders. The firm came into being in 2015, following the merger of Shoreline Sales & Distribution and Quality Beverages.
In fund news, the headlines were dominated by the decision by Mauritius' non-bank financial markets regulator to suspend the licences of seven of Quantum Global's funds. The move took many by surprise, not least the Quantum Global Group, whose representative told Africa Capital Digest in an emailed response that "...to date there was no reason given...". We're sure thus story will continue to evolve.
In more positive fund-related news, the Emerging Africa Infrastructure Fund has revealed that it has completed its latest round of fundraising, landing $385 million for long term debt investments in the continent. The mix of investors making commitments is made up primarily of development finance institutions, but also includes a notable first for the Investec Asset Management-managed investment vehicle. Global insurance powerhouse Allianz becomes EAIF's first commercial institutional investor, financing €75 million and $25 million, both over 12 years.
The African Local Currency Bond Fund has received a total of $50 million from OPIC, the U.S. government's development finance institution and the African Development Bank. This latest commitment brings the total raised for the fund to $180 million since it was first launched in 2012. Managed by Lion's Head Global Capital, the fund mobilizes domestic capital in Africa to invest in local currency bonds and provide companies with access to capital. It also provides local investors such as pension funds and insurance companies with the opportunity to make long-term investments in their own currencies, helping them manage their long-term liabilities better.
As always, you can review these and other stories by clicking through to this week’s preview 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.
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