The weekly roundup of Africa's Private Capital news
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Here's the latest digest of the most noteworthy private equity, venture capital and infrastructure financing deals and investment insight and news stories related to Africa that were published over the last seven days. We'd be delighted if you shared it with interested colleagues and/or partners, so please feel free to forward the newsletter on to them. If they would like to receive their own weekly copy they're more than welcome to sign up here.
We're trying to make this as useful a tool as possible for Africa-focused private capital investment professionals and their advisers. Let us know what you think. Send tips, suggestions and feedback to me at [email protected].
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The week in brief...
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Deal activity in Africa last week was brisker than it has been for a while. By far the biggest news was Steinhoff International's $5.7 billion acquisition of South Africa's largest retail clothing group, Pepkor. The deal provides private equity investor Brait with a significant exit, earning them $2.4 billion in cash and shares for their stake. Brait's CEO, John Gnodde, told Bloomberg that the firm would be looking to deploy the windfall in acquisitions in 12 to 18 months' time. This drew comment from some analysts who expect publicly-listed Brait's shareholders to push them to deploy the replenished war chest rather more quickly than that. We'll watch to see how that plays out.
In other exit news, a consortium led by DPI sold Assur Africa Holdings, owners of a majority stake in Nigerian insurer Mansard, to the AXA Group for approximately $246 million. Other investors in the exiting consortium include AfricInvest, DEG, FMO and PROPARCO. The transaction is expected to close before the year's end.
It was also a week in which we saw a number of firsts from The Carlyle Group in Africa. Their first investment in Nigeria, their first investment in South Africa, the first deals for their $698 million sub-Saharan fund. In their maiden deal in Nigeria, they invested $147 million through a rights issue to take an 18% stake in Lagos-based lender, Diamond Bank. In their maiden South African deal, they teamed up with Old Mutual Private Equity to acquire Ethos Private Equity's stake in tyre retailer and wholesaler Tiger Automotive. Terms for this deal went unreported. In both cases, the deals were the first to be made through Carlyle's dedicated $698 million sub-Saharan fund which closed earlier this year. The fund's next transaction could take place as soon as the first quarter of next year, when, according to Businessweek, they are reportedly looking to do another Nigerian deal in $50 million to $200 million range.
Egyptian snack maker Bisco Misr remained in the headlines as Abraaj Investment Management and Kellogg's bid and counterbid each other to acquire the company. If you remember, Abraaj had made an original offer of $118 million, only to see their bid bested by a $127 million offer from Kellogg's, the U.S. cereal maker. Early last week, Abraaj countered again, raising their offer to almost $128 million. We'll have to see what happens next, although it seems to us that Abraaj may be in a stronger position having already won regulatory approval to make the acquisition.
On the debt investment front, Ethiopia becomes the latest sub-Saharan African country to tap the sovereign bond market to raise capital to finance domestic infrastructure projects. The roadshow to raise a $1 billion ten-year bond kicks off this coming week. Investors expect Ethiopia will have to pay a yield of between 6% and 7%. Meanwhile in other credit market news, Cote D'Ivoire is looking to raise $302 million to finance projects and resolve its arrears with banks and insurance companies. We'll see if investor appetite for Africa's bonds remains as healthy as it has been, despite the calls for restraint from some quarters.
Some interesting perspective on the challenges for infrastructure development in Africa were published this week. PwC has just released its outlook report on Capital Project and Infrastructure spending. John Caywood, PwC Africa's Capital Projects and Infrastructure Leader recorded a brief video summarizing the main factors hampering development. A link to the full report is also included.
To read more about these and other stories in this active week, please scroll down and review the headlines, abstracts and links.
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Private Equity
South Africa's biggest furniture retailer, Steinhoff International Holdings, acquired Pepkor for $5.7 billion last week. The deal provides listed private equity investment firm Brait with a $2.4 billion exit from its stake in the closely held clothing retailer. Brait will get approximately $1.37 billion in cash with the balance being paid in Steinhoff shares.
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Private Equity
Africa-focused private equity firm Development Partners International, (DPI), and other investors have agreed to sell Assur Africa Holdings, (AAH), to the AXA Group for approximately $246 million. AAH owns 77% of Nigerian Insurer, Mansard International. The transaction is expected to close before the end of 2014. AfricInvest, DEG, FMO and PROPARCO were co-investors in AAH with DPI.
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Private Equity
Carlyle takes $147mln Diamond Bank stake in maiden Nigerian deal // ft.com
With its first deal in Nigeria, Carlyle is spending $147 million for an 18% stake in Lagos-based Diamond Bank. The deal was part of a $310 million rights issue sponsored by the bank last week. Carlyle will pay for the purchase from its dedicated $698 million
sub-Saharan Africa fund, which it raised earlier in 2014.
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Private Equity
In the latest twist to the acquisition of Egyptian snack maker Bisco Misr, Abraaj Investment Management, a subsidiary of The Abraaj Group, raised its offer from $118 million to almost $128 million for 100% of the outstanding shares. This latest bid trumps US Cereal maker Kellogg's $127 million bid, which was made two weeks ago.
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Private Equity
Britam has acquired 99% of Real Insurance Tanzania, Malawi and Mozambique for $15.74 million in cash and shares. According to the company, Real Insurance will benefit from the capital injection as well as integration with Britam as its capital base is strengthened and investments are made in systems and product development.
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Private Equity
As part of healthcare company Ascendis's bid to increase black economic empowerment, (BEE), participation, the company has issued R140 million of convertible debentures to WDB Investments and Senatla Capital. The deal is non-dilutive to existing shareholders as the deal was structured by issuing shares in Coast2Coast, Ascendis's majority shareholder, rather than issuing new shares in Ascendis itself.
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Private Equity
Carlyle and Old Mutual have agreed to buy 100% of Ethos Private Equity's stake in South African tyre dealer Tiger Automotive. While the terms of the deal were not fully reported, sources tell Reuters that the deal values the tyre company at around $158 million. The deal represents Carlyle's first transaction in South Africa.
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Private Equity
The Competition Authority of Kenya has approved private equity firm Fanisi Capital's bid to acquire a 40.15% share of Ngare Narok Meat Industries. The $50 million Kenya- based firm is investing approximately $2.4 million in the meat producer and distributor to further expand its production facilities and distribution network..
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Private Equity
According to a press release, AgDevCo, Pearl Capital Partners and Jacoma Estates have all participated in a $6 million financing round for Tropha Estates, a macademia farm in Malawi. Social Impact agribusiness investor AgDevCo is providing $2 million in debt while Pearl Capital Partners and Jacoma Estates, (Tropha's parent company), are each making $2 million equity investments in the farm.
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Private Equity
Dutch investor DOB Equity has announced that it has completed an investment in Ugandan agricultural trading company, Joseph Initiative. Terms of the deal were not reported. The capital will be used to expand the firm's processing and storage facilities in Western Uganda.
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Venture Capital
Africa-based e-commerce company Jumia has raised $150 million in new funding from existing shareholders. The deal values the company, which was launched in 2012, at $555 million. Neither the round's investors nor investment amounts were given, but prior investors in the firm include Rocket Internet and Summit Partners.
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In Carlyle's maiden South African deal, they join Old Mutual in acquiring Ethos's stake in TiAuto
Image Credit: 3d-car-shows.com
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Credit
Ethiopia's $1bln sovereign bond sale gets underway // ft.com
Ethiopia is tapping the sovereign bond market for the first time as it kicks off a roadshow this week in a bid to raise a $1 billion 10-year bond from international investors. The proceeds of the sale will be used to finance ambitious infrastructure development plans. Analysts expect Ethiopia to pay a yield of between 6% and 7%.
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Credit
The Cote d'Ivoire's Treasury is launching a $302 million dual tranche bond sale. The first tranche of approximately $151 million will yield 3% for 10 years, while the second, will yield 5.85% for 7 years. The proceeds will be used to clear state arrears with banks and insurance companies as well as finance projects announced in the 2014 budget.
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DFI
As part of efforts to boost integration in East Africa, The World Bank has pledged to loan $1.2 billion to countries in the region to improve inland waterways and the ports in Kenya and Tanzania. The 5-nation East African Community is working to package cross-border infrastructure plans to make them more attractive to potential investors. The funding will help support the bloc's investment plans over the next 3 to 7 years.
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DFI
Khalifa Fund for Enterprise Development, the UAE-based SME Investment fund, has agreed to provide up to $200 million to help provide microfinance loans in Egypt. The loan facility, agreed with the Egyptian government, is expected to support 100,000 projects, with a significant focus on those initiatives in rural areas and on those that are women-led.
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DFI
EBRD grants 100mln euro loan facility for MSMEs // mfw4a.org
Morocco's Banque Centrale Populaire, (BCP), has entered into a 100 million euro loan facility agreement with the European Bank for Reconstruction & Development, (EBRD), to support the financing of Micro, Small and Medium sized enterprises throughout the country. The funds will be provided to BCP's regional branches to help support the growth of businesses in their various markets, both at home and abroad.
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Venture Capital
Anglo American plans $100mln SME investment fund to stoke demand // ft.com
Mining giant Anglo American is planning on investing $100 million in companies that use platinum and associated metals in a bid to stoke demand for the commodities the mining group produces. Similar in scope to VC investments, Anglo American will target investments in small and start-up companies that are developing technologies that require little known metals such as ruthenium and iridium as well as platinum.
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Venture Capital
Spark Venture Fund, set up by Kenyan telco Safaricom, will have $1 million to invest in Kenya's start-ups over the next 2 years. The fund aims to invest between $75,000 and $250,000 in established companies in the mobile payments, SME cloud solutions, media content and data messaging spaces.
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Compliance & Regulation...
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Regulation
Draft investor protection bill allays foreign investor fears // bdlive.co.za
Protection provisions for foreign investors in South Africa's draft Investment Promotion and Protection Bill have been strengthened by changes agreed by the National Economic Development and Labour Council. Foreign investors had feared the original draft, which was published for review in November 2013, left them less protection against expropriation and other property infringement rights than the bilateral investment treaties which were already in place.
Read more...
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Capital Markets
In response to encouraging levels of investor demand, the Nigerian Stock Exchange plans to allow trading in derivatives to begin by 2016. The Exchange, which is one of the main platforms that provide foreign investors with the opportunity to access Africa's fast-growing economies currently only offers shares, bonds and exchange-traded funds.
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Private Equity
Following the two investments made by Carlyle in Nigeria and South Africa last week, Genevieve Sangudi, a Managing Director with firm's $698 million sub-Saharan fund, has told Businessweek that the fund expects to invest between $50 million to $200 million in a second Nigerian company by the end of the first quarter of 2015. The firm is targeting banking, consumer goods and manufacturing opportunities in Nigeria over the next 5 years.
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Private Equity
South African finance firm Business Partners is targeting opportunities in the education sector with its $13 million Education SME Fund. The firm will finance expansion, working capital, takeover and management buyout initiatives up to $2.2 million at profitable education companies.
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Private Equity
Africell on hunt for US private equity investors // wsj.com
Mobile phone operator Africell Holdings is courting U.S. private equity firms in a bid to sell stakes in the $1.5 billion firm. Ziad Dalloul, the company's founder, tells the Wall Street Journal that the targets include Carlyle, KKR and Providence Equity Partners, all of whom have made significant investments in African enterprises during 2014.
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Private Equity
Listed Kenyan investment company Centum is in several discussions with companies to set up partnerships in healthcare and education services. These potential partnerships are in two of the eight sectors Centum believes offer the best investment and growth promise and where they can create platforms of scale to encourage other investors to join them.
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Private Equity
USA initiative to bring U.S. Capital to emerging markets // wsj.com
At the Global Entrepreneurship Conference in Marrakech last week, US Commerce Secretary Penny Pritzker told the Wall Street Journal that she is considering launching "some sort of capital trade mission" aimed at bringing emerging world entrepreneurs and business owners together with american capital providers.
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Perspectives - M&A
As more of South Africa's bricks and mortar retailers eye the online space, an uptick in the volume of M&A activity is expected. The recent marriage of Kalahari.com and Takealot.com was driven by increasing competition from both local and international online retail companies, forcing the realization that they'd both improve their chances of success by working together rather than apart.
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Perspectives - Infrastructure
Factors hampering Africa's infrastructure deals // pwc.com
A video perspectives piece with John Caywood, PwC's Africa Capital Projects and Infrastructure Leader, on the challenges facing infrastructure projects and dealmakers in Africa. The weak ability of central governments to plan, set the right regulatory policies and frameworks is one. Lack of funding, not only to bridge the infrastructure gap, but also to finance feasibility studies to improve the bankability of potential projects is another. This perspective is part of the broader research piece "Capital Project and Infrastructure Spending: Outlook to 2025" just published by PwC.
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Trends - M&A
Smaller, strategic M&A deals won out in the third quarter in MENA. While the volume of deals rose 17% compared with the same period a year earlier, the total value of those deals sank by 47%. That's according to EY's MENA Q3 2014 M&A Update. Consumption-led sectors such as real estate, construction, consumer products and diversified industrials dominated activity
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| Companies, People & Profiles... |
Company News
Nedbank's corporate and investment banking units to merge // reuters.com
Nedbank is merging its corporate and investment banking units together, bringing the South African bank's wholesale operations under one management team. The merged business unit will be led by the current Head of Nedbank Capital, Brian Kennedy, who will be responsible for the merged unit from January 1, 2015.
Read more...
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Company News
The Public Investment Corporation and GazpromBank, a subsidiary of Russian energy company Gazprom, have signed a cooperation agreement which could eventually lead to them co-investing in energy deals in Africa. The move, if successful, could intensify competition for energy deals on the continent. GazpromBank Africa opened its first representative office in Johannesburg last week.
Read more...
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Company News
Private Equity firm Ascent, which manages the $50 million Ascent Rift Valley Fund, was officially launched in Uganda, stating its aim to invest $10 million within the next 12 months in Ugandan Companies with minimum revenue bases of $1 million. It's minimum investment will be $2 million and it will target firms involved in Uganda's oil sector.
Read more...
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Sustainable forestry fund seeks private equity or vc professionals
Based in Frankfurt, Germany
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Investment Principal for private equity fund
Based in Nairobi, Kenya
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Senior Legal Adviser for Old Mutual Investments
Based in Cape Town, South Africa
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Infrastructure Investment Analyst for the IFC
Based in Lagos, Nigeria
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Junior Private Equity Research Analyst for AVCA
Based in London, UK
Read more...
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Chief Strategy Officer for the African Development Bank
Based in Abidjan, Cote d'Ivoire
Read more...
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Partner, Africa Investments at LeapFrog Investments
Based in Johannesburg, South Africa
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Investment Director for Pan African Investment fund
Based in London, UK
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Director, LeapFrog Labs at LeapFrog Investments
Based in London, UK
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Director, Value Creation at LeapFrog Investments
Based in London, UK
Read more...
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A record turn-out of over 550 private equity professionals expected with 120+ local and international LPs including: Public Investment Corporation, Grinnell College, Public Service Pensions Fund, Gatsby Charitable Foundation, Los Angeles County Employees Retirement Association, GIC Special Investments, The Church Pension Fund and many more... 10% discount - please quote VIP code: FKR2356ACDWB:
SuperReturnAfrica.com...
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FT Frontier Markets Summit
New York, December 10th, 2014
Read more...
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2015 SAVCA Annual Private Equity Conference
Stellenbosch, February 12th to February 13th, 2014
Read more...
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Global Private Equity Conference
Washington, DC, May 11th to May 14th, 2015
Read more...
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Africa Financial Services Investment Conference
Brighton, May 12th to May 15th, 2015
Read more...
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We hope you found the digest to be a useful summary of the major happenings in Africa's private capital markets last week. We'd love it if you shared it with colleagues and business partners. They can sign up for free here.
Best wishes for a productive week - if you have any tips, suggestions, questions or comments, please get in touch.
All the best,
- Allan
Allan Cunningham
Editor & Publisher
AfCD | Africa Capital Digest
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