Africa Capital Digest - The Weekly Wrap, February 29th, 2016

Last week in brief… Private Equity fundraising in Africa saw a couple of first-time funds holding closes last week. While neither was particularly huge, here is another sign that the private equity asset class is attracting interest on the continent.

Of the two, Enko Capital’s second and final close for their debut private equity fund was the larger at $83.25 million. Enko Africa Private Equity Fund’s strategy is to make growth capital deals in late-stage private companies that have the potential to be listing candidates within 4 to 5 years of an investment. The fund held its first close at $48.25 million in April 2014 with commitments from the African Development Bank and Soros Investment Brothers. PROPARCO, the French DFI, is joining them at the second close along with a group of European family office and high net worth investors.

Meanwhile, Ashburton Investments, the South African asset manager, also announced that a final close had been held at the end of January for their first private equity fund. The R500 million (or approximately $31 million) fund will pursue a combined strategy of direct private equity co-investments alongside private equity firms, the acquisition of secondary interests from existing funds and could make commitments to new private equity funds in both South African and the rest of the continent. The amount earmarked for direct investments is capped at 50% or R250 million of the fund.

In deal news, Amethis Finance announced it had made a follow-on investment in Pétro Ivoire, a distributor of oil and gas products in Côte d’Ivoire. Amethis had originally invested in the firm in 2013, when it acquired a 39% stake. This time around the deal was structured as a debt/equity deal, with 66% of the capital being provided as equity and the balance in the form of convertible loans.

Synergy Capital has made the fifth investment from its $100+ million private equity fund which closed in September last year with a with an investment in Africa Terminals, a Terminal and Storage company offering services to local and international petroleum products companies across West Africa. Once again, terms of the deal were not disclosed. The capital will be used to acquire additional terminal and storage facilities in countries along the West African coast, including Nigeria, Ghana, Liberia and Senegal, a region which is experiencing acute shortages in storage capacity and which is expected to get worse as the impact of industry is deregulation is felt across the region.

At the smaller end if the scale, Amadeus Capital Partners, the UK-based technology investor made its second deal in Africa in a month with a $2 million investment in Hepstar, the Cape Town-headquartered digital insurance distributor which was founded in 2013. And Norwegian DFI, Norfund is backing East African logistics company Freight-in-Time with $10 million in exchange for a significant minority stake. Norfund will be taking a board seat as part of the deal, but nut no additional transaction terms were disclosed.

To finish off with this week, some interesting trend data. M&A information provider, Mergermarket published its Deal Drivers Africa report last week, revealing that with 290 deals for 2015, African M&A volume inched up by 1% in 2014, the highest since 2007. However, a combination of currency woes and fewer big ticket deals pushed overall deal value down by 26% to $23.3 billion for the year. There were only 5 deals worth more than $500 million in 2015, compared with 14 for the prior year. The mid-market was responsible for volume growth with 88% of transactions on the continent being values at $250 million or less.

Allan Cunningham

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.