Last week in brief...This week it was mainly about the fundraising, but it did also provide some interesting deals. Of the fundraising items. there was a launch, a couple of closes as well as a couple of potential commitments to African funds by European DFIs. The deals, meanwhile, were centered on the telecoms and financial services sectors.
Nairobi-based Catalyst Principal Partners has reportedly raised $155 million so far for its second fund. While nominally sector-agnostic, the 10-year fund will target mid-market growth capital investments within fast growth consumer demand driven sectors across Eastern Africa. With an IRR target of 25%, the fund's strategy is to take significant minority or control positions in each of the companies it backs, with typical deal sizes expected to range in the $7.5 million to $25 million range.
In South Africa, Ethos has held a first close for its maiden Artificial Intelligence fund last week. The fund, which is South Africa's first private equity investment vehicle dedicated to the AI sector, has raised R600 million or almost $42 million from a group of investors which include Ethos Capital, the firm's JSE-listed investment vehicle and Standard Bank. The fund's ultimate aim is to raise R1 billion (or approximately $70 million) to invest in businesses that are set to benefit disproportionately from AI technology.
Staying in South Africa, Verdant Capital is launching a new fund to invest in subordinated debt and preference share opportunities across sub-Saharan Africa. The Verdant Capital Hybrid Fund has already secured an anchor commitment from an as yet unnamed European development finance institution. The 12-year fund, which is looking to raise $80 million by final close, expects to hold its first close next year. It'll invest its capital in inclusive financial institutions such as challenger banks, microfinance banks, SME-lenders and home finance institutions.
Ascent Capital's second fund is under consideration for a $25 million investment by the European Investment Bank. The recently launched Ascent Rift Valley Fund II, which is reportedly aiming to hold its first close in the middle of next year, is ultimately looking to raise $120 million, which will be used to back small and medium sized businesses across a variety of sectors in the region.
The Swiss Investment Fund for Emerging Markets or SIFEM is investing $10 million in Synergy Capital's second fund. The generalist fund is aiming to raise a total of $250 million to invest in deals in small and medium-sized businesses in anglophone West Africa. SIFEM had backed this latest fund's predecessor, Synergy Private Equity Fund I, to the tune of $7.5 million.
The biggest deal of the week in dollar terms was a debt investment by OPIC. The U.S. Government's development finance institution is investing $100 million of debt into Africell Holdings, which has operations in several African countries. The transaction, which was led and arranged by Lintel Capital, gives the privately-held telecommunications company the necessary financing to do a few things including the expansion and upgrade of its networks and refinanceing some of its existing debt.
Making more news last week, Ethos has made an investment in Channel VAS on behalf of a couple of its new private equity funds. The South Africa-headquartered private equity firm is spending R700 million, or almost $49 million for an undisclosed stake in the fintech firm, using capital from two of its newest funds - Ethos Fund VII and Ethos AI Fund I.
The deal is the first for the two funds. Ethos Fund VII, which held a first close of R2 billion (or $139.6 million) from South Africa-based investors in October and Ethos AI Fund I, which raised R600 million (or almost $42 million) last week, both now have stakes in the mobile financial services, big data analytics and airtime credit services firm.
And finally, Enko Capital Managers is making the latest investment for the Enko Africa Private Equity Fund, taking a minority stake in a Nigerian mortgage lender. The private equity fund manager is investing an undisclosed amount of expansion capital in Imperial Homes Mortgage Bank, a well-established mortgage lender which will be used to increase the bank's capital base and help grow its loan book. With this deal, the $64 million Enko Africa Private Equity Fund is now 75% deployed.
That's it for this week. As always, you can review these and other stories by clicking through to this week's preview edition of the newsletter.
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.