Last week in brief… A notable private equity exit, a significant capital raise and a number of smaller scale venture deals made the news in Africa's private capital deal world during the last week.
Development Partners International or DPI scored the exit, selling their stake in Ghana's CAL Bank to newly-launched financial services platform, Arise for an undisclosed sum. DPI first backed Ghana's CAL Bank in 2012 as part of a GHS 75 million private placement, (approximately $17 million at today's rates). Since then, the bank's share price has jumped by 200% on the back of an annual rate of post-tax profit growth of 77% between 2011 and 2015, so it's safe to assume that DPI earned its investors strong equity returns on the deal.
Fairfax Africa, a new investment holding subsidiary set up by Canadian insurer Fairfax Financial, announced that it expected to raise a total of $500 million for opportunities in Africa. The investment vehicle will target investments in both public and private equity and debt opportunities in businesses either focused on or reliant on the continent. In addition to other Fairfax funds, its own funds, Fairfax Africa has garnered commitments from other investors including the Ontario Municipal Employees Retirement System and CI Investments.
In the first of a number of venture deals, Silvertree Capital has acquired TopCheck, a Nigerian financial services price comparison platform in an undisclosed deal. The company, which provides consumers with an opportunity to make free price comparisons for insurance, loan and broadband internet plans online, grew rapidly in 2016, processing up to 3 billion Naira (approximately $10 million) in Gross Application Value per month. The firm had raised a little over $1 million in seed financing from a group of investors in August 2015.
FarmDrive has become the latest investment for Safaricom's $1 million Spark Venture Fund. The convertible equity deal could see Spark owning equity in the Nairobi-headquartered agricultural credit scoring business in the future. Using mobile technology, FarmDrive assigns credit scores to agricultural smallholders, linking them up to potential lenders through the application. The capital will be used for product development and marketing purposes, enhancing its credit scoring technology and attracting more users to the app.
HBD Venture Capital, Mark Shuttleworth's venture investment vehicle managed by Knife Capital, is exiting its holding in Flightscope in a management buyback. Launched in 1989, Flightscope developed systems to measure projectiles for the defense industry before diversifying into sports applications in a quest for growth. HBD first backed the 3D dopplar ball-tracking radar for sports in 2006 to help support Flightscope's global expansion strategy.
In real estate investment news, asset manager STANLIB is partnering with Chestnut Uganda to finance the development of the Arena Mall, a new retail and shopping center located in Kampala's Nsambya suburb. The development, which is expected to cost $50 million, is forecast to open its doors in November 2018.
In other property investment news, Centum Investments and Investbridge Capital are embarking on the development of a 2,000 student school with the acquisition of 20 acres of and in Kenya's Kiambu district. In total, the estimated development costs for the project will be approximately $16 million. The move is the first step in a plan first reported in July 2015, when the Nairobi Stock Exchange-listed investment company and Dubai-headquartered private equity firm announced a partnership with education firm SABIS Holdings to set up a firm which will invest significant amounts establishing schools in Africa.
Finally, on the deal front, sources tell Kenya's Business Daily that private equity giants Carlyle and TPG are among the investors looking to acquire coffee chain Java House from Emerging Capital Partners in a deal that could be worth as much as $100 million. Founded in 1999, Emerging Capital Partners acquired a 90% stake from the company's founders in 2012. If the deal goes through, it'll be Kenya's largest restaurant transaction to date.
As we approach the 30-day anniversary of President Trump's administration, a couple of interesting Africa-related policy perspective pieces caught our eye. The fact that they have diametrically opposing views points to the fact that no-one has a clear idea of how things will play out. Some policy makers are fretting that an "America First" approach puts most of past administrations' Africa initiatives at risk. The Financial Times reports that some feel AGOA, Pepfar and Power Africa, all pillars of Washington's Africa policy, could be in jeopardy.
Meanwhile, as part of The Brookings Institution's Foresight Africa 2017 report, Witney Schneidman lays out a potential scenario on how Africa can benefit from the new administration's anticipated initiative to boost private sector investment in America's infrastructure. It's up to Africa's leaders to actively engage with the new government to highlight how a substantial infrastructure program would benefit both the US and African economies.
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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