November 24, 2014 
The weekly roundup of Africa's Private Capital news


 

This week, as with every week, we've sifted through a large amount of content from multiple sources to bring you the latest digest of the most noteworthy private equity, venture capital and infrastructure financing deals and investment news stories related to Africa from the 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 private capital market professionals focused on Africa.  Send tips, suggestions and feedback to me at acunningham@africacapitaldigest.com.

Many thanks for reading.
The week in  brief...

In the biggest reported deal of the week, Ethos Private Equity has agreed to write a $144 million cheque to acquire diversified packaging company Nampak's Tissue, Corrugated and Sacks divisions in South Africa.  According to Business Day the disposal of these "underperforming" assets makes strategic sense for the company and quotes an analyst as saying that Ethos seems to have picked up the divisions for a price that is 20% lower than the net asset value of the businesses.

 

Meanwhile, Kenya saw some healine-grabbing private equity activity last week with two deals. In the first, LeapFrog Investments has sealed an $18,7 million deal to acquire a majority stake in Resolution Insurance.  The investment is being made from LeapFrog's second fund which closed at $400 million a couple of months ago.  Kenya's non-life insurance market is growing at 20% a year, so the deal gives the fund exceptional exposure to this growth.  In the second Kenyan deal of the week, Fusion Capital spent $2.2 million to bump up its stake in Xtra Publishing to 57.6%.  The company published XNews, the free evening paper launched in March this year, now boasting a daily distribution of 30,000 print copies.

 

Abraaj Investment Management's bid to acquire a majority stake in Egyptian snack maker Bisco Misr seemed to have reached its conclusion last week when it announced it had received approval to acquire 100% of the company for $118 million.  But by the week's end, reports started to emerge that US cereal maker Kellogg's had jumped into the fray, offering $127 million for the company.  We'll have to see how things play out, but as we go to press, the Kellogg's bid is being scrutinized by the relevant authorities and Abraaj has not publicly reacted.

 

On the fundraising front, things were very quiet last week.  Nigeria announced the launch of a $50 million venture capital fund to support the launch and expansion of small and medium enterprises in the country.  Details on who will manage the fund have not, as yet, been revealed.  On the debt front, meanwhile, reports are circulating that Kenya plans to raise an additional $750 million for development projects by expanding the sovereign bond issue it held in June.

       

And finally, perspective on the investment opportunities in Angola from Teodoro Poulson, a member of the investment committee of FACRA, the government-backed venture capital fund.  He delivers great insight on the investing landscape in Angola, the opportunities he sees and the government's initiatives to boost investment in the country. 

  

To find out more about these and other stories, please  scroll  down and review the headlines, abstracts and links to the original articles. 

Media Barter
Deal News...
Private Equity
Ethos acquires Nampak paper divisions for $144mln // bdlive.co.za

Packaging company Nampak is selling most of its corrugated paper, sacks and tissue divisions in South Africa to Ethos Private Equity for R1.6 billion or $144 million.  The deal is valued at some 20% less than the net asset value of the businesses which likely reflects the recent weak performance of the divisions.  Ethos's investment is being made from its fourth fund, and Nampak will use the proceeds of the sale to finance the expansion of its remaining businesses throughout Africa.

Private Equity
Abraaj completes $118mln acquisition of Bisco Misr // ventures-africa.com

Abraaj Investment Management, a subsidiary of The Abraaj Group, confirmed last week that it has received the necessary clearances to complete the 100% acquisition of Egyptian snack maker Bisco Misr.  However, in a last-minute development at the end of last week, Ventures Africa reports that US cereal maker Kellogg's has made a last-ditch bid of $127 million for the company, a move popular with some Bisco Misr shareholders. The Kellogg's bid is subject to approval by the Egyptian Financial Supervisory Authority.

Private Equity
ING Capital arranges $41.4mln loan for Ethiopian Airlines // theafricareport.com

Ethiopian Airlines has secured a seven-year, $41.4 million loan from ING Capital to buy two Boeing 777 aircraft.  The loan is backed by the Ex-Im Bank and the capital is being provided by another unnamed institution with ING acting as their co-arranger.

Private Equity
LeapFrog invests $18.7mln for majority stake in Resolution // bloomberg.com

LeapFrog Investments is investing $18.7 million to take a majority stake in Kenya's Resolution Insurance.  The investment is being made from LeapFrog's Fund II which claosed at $400 million a few months ago.  Details of the size and valuation of the stake were not reported. The deal gives LeapFrog well-positioned exposure to the strong growth trends anticipated in Kenya's insurance markets over the next few years.

Private Equity
Fusion spends $2.2mln for control of Xtra Publishing // bloomberg.com

Nairobi-based private equity firm Fusion Capital has raised its shareholding in Xtra Publishing to 57.6% from 40% through a $2.2 million investment in a rights offer. Xtra publishes and distributes 30,000 copies of XNews, a free evening print newspaper supported by advertising as well as online and mobile-phone services.

Fund News...
DFI
AfDB loans Kenya $133mln for electricity improvement // theafricareport.com
The African Development Bank has approved a $133 million loan to finance a project improving access to electricity for people in Kenya's rural areas.  The total cost of the project, which aims to connect over 300,000 people, will be $147 million.  The Kenyan Government will be providing the remaining balance of $14 million for the project.  
Credit
Kenya to re-open sovereign issue for additional $750m // mfw4a.org
According to Making Finance Work For Africa, Kenya plans to borrow an additional
$750 million to fund development projects by re-opening its sovereign bond issue which raised $2 billion in June.  The move comes despite an IMF warning to countries to exercise caution in tapping the international credit markets given macro-economic volatility, currency risk and the potential for debt levels becoming a drag and undermining economic growth. 
Venture Capital
Nigeria creates a $50mln venture fund for SMEs // mfw4a.org
Nigeria is launching a $50 million Venture Fund to help boost small and medium-sized businesses in the country.  According to remarks made President Goodluck Jonathan, the fund will be managed by an independent entity to ensure equitable access for all.  
Compliance & Regulation...
Corporate Governance
Changing perception of weak governance in Africa one step at a time // wsj.com

An interesting piece on some of the current initiatives underway designed to help improve the weak governance standards in Africa, both perceived and actual.  It highlights the challenges for investors in economies where many of the companies are small, closely-held and family-run.

Read more...

Private Equity
Calls for federal guarantee scheme for private equity // businessdayonline.com

At CBO Capital's annual investors conference in Lagos last week, the CEO of AMCON called on the Nigerian government to set up a guarantee scheme to encourage more private equity investment in the country.  "I think we need to support private equity to create a more suitable environment for companies to have a guarantee scheme for the debt. It will encourage and make private equity more comfortable in lending," he told conference attendees.

Read more...


c  businessafricadaily
Fusion Capital ups its investment in Kenya's Xtra Publishing to achieve a controlling stake
Image Credit: Business Daily              
Projects & Portfolio Companies...
Private Equity
Catalyst-backed Mimosa Pharmacy to seek $5mln IFC loan // ventures-africa.com
To help expand its retail business over the next five years, Mimosa Pharmacy is seeking a $5 millon loan from the IFC.  The loan will enable the company to open new stores in Nairobi as well as other major cities in East Africa.  As reported in September, Catalyst Principal Partners partnered with strategic investor Africa Chemist and Beauty Care in an undisclosed debt/equity deal with Mimosa.
Private Equity
Eaton and Helios buy more towers from Bharti // reuters.com
As past of Bharti Airtel's plans to dispose of towers in Africa, sources tell Reuters that Helios Towers looks set to acquire up to 1,000 towers in Tanzania, while Eaton Towers will acquire an undisclosed number of towers in Malawi.  Details of the transactions are not available as the deals have yet to be concluded.
Private Equity
Microsoft4Afrika signs alliance with Saphon Energy // ventures-africa.com
Microsfot4Afrika has signed a strategic alliance with Tunisian renewable energy startup, Saphon Energy, to provide financial resources, technology support and high-level visibility for their research and development of wind energy products and services.
Perspectives & Trends...
Perspectives - Private Equity
The Sub-Sahara's continuing appeal for private equity investors // linkedin.com
A look at the key factors that continue to drive private capital interest and investment in sub-saharan companies and why that interest looks set to grow over the coming years. There are risks, of course, but not as great in many places as there once were. 
Perspectives - Private Equity
Private Equity perspective from the IFC's Vergarra // bloombergtvafrica.com
With private equity flows in Africa increasing at 40% a year, an interview with the IFC's regional director German Vergarra on the outlook for private equity investment in the next decade, the sectors that show most promise and the likely evolution of the private equity landscape.
Perspectives - Private Capital
Angola's investment landscape; a Q&A with Teodoro Poulson // forbes.com
An interesting Q&A piece in Forbes last week with Teodoro Poulson, an investment committee member of FACRA, the Angolan government-backed venture capital fund. He discusses the investment landscape in Angola, where he sees opportunity and what measures the government is taking to support the development of investment in the country's assets and resources.
Perspectives - Venture Capital
SSA trails in Global Entrepreneurship Index // ventureburn.com
A new study by the Global Entrepreneurship Development Institute ranks most sub-Saharan african countries as being some of the most difficult environments in which to launch startups.  The report finds that Africa's attitude to risk acceptance, networking, cultural support and opportunity perception is particularly weak. 
Trends - Regional
GCC firms set out on cautious investment spree in Africa // gulfbusiness.com
While Gulf entities have provided some $30 billion in funding for infrastructure in Africa over the last decade, much of it was for North Africa.  Recently, a shift toward investment in sub-Saharan countries seems to have happened, led by sovereign wealth funds.  An interesting article that examines the trend and some of the the concerns Gulf investors have about investing south of the Sahara..
Companies, People & Profiles...
Company News
AfDB, Abraaj and Helios mull office openings in Abidjan // wsj.com

As part of a piece about private equity's increased interest in sourcing deals in Cote d'Ivoire, the Wall Street Journal reports that a number of institutions are looking at opening, or re-opening, offices in Abidjan.  They include the African Development Bank, looking to return to its headquarters after an 11-tear self-imposed exile caused by the outbreak of civil war, as well as The Abraaj Group and Helios Investment Partners who are looking to open up in the country in the next few years. 

Read more...

Company News
Atlas Mara to hunt for further acquisitions // ventures-africa.com

Ventures Africa reports that, according to a recent trading statement,  Atlas Mara is looking for more acquisition opportunities in both new and existing markets as it continues its bid to build sub-Saharan Africa's largest bank. 

Read more...

Company News
Castlepines named lead investor in Tunisia Economic City // zawya.com

International Infrastructure fund Castlepines Global Equity has signed a memorandum of agreement with Tunisia Economic City to be a lead investor in the development of this mega city project in Enfedha, Tunisia.  Actual terms of intended investments were not reported.

Read more...

Company News
Centum Investments reports profits up // reuters.com

Listed and unlisted equity investor Centum Investment Company has announced a 25% increase in first half profits driven by a sharp increase in investment income.  Profts before tax for the six months until September 30th climbed to $14.28 million.

Read more...

Company News
CMB wins tender to manage BPOPF private equity assets // mmegi.bw

Asset Management firm Capital Management Botswana has won the tender to manage Botswana Public Officers Pension Fund's $55 million private equity fund.  CMB's mandate will be to make private equity investments in Botswana.  Terms of the management agreement were not disclosed.

Read more...

Company News
EuroMena wins approval for AIFMD regulation // zawya.com

EuroMena III's fund management team has won approval from the Malta Financial Services Authority to be regulated Alternative Investment Fund Managers Directive 1. Zawya reports that the approval means that the fund is well-placed to raise its next fund, targeted at between $150 million to $200 million, by June 2015.

Read more...

Company News
NSE and LSE agree to support dual listings // africacapitalmarketnews.com

The Nigerian Stock Exchange has signed an agreement with the London Stock Exchange to support African companies seeking dual listings in London and Lagos.  The agreement builds on the implementation of a new settlement process earlier this year which significantly eases the listing and trading of shares of companies from both countries on both exchanges.

Read more...

People Moves
Dag Skattum rejoins JP Morgan // ft.com
JPMorgan has coaxed Dag Skattum to return as Vice Chair, Europe, Middle East and Africa banking following a number of years working in private equity, firstly at TPG Capital and most recently at One Thousand and One Voices, the Africa-focused buyout group led by brewing heir, John Coors.
Current Job Postings...
Head, Operations & IR at Accion's Frontier Investment Group 

Based in Washington, DC, USA 

Read more...

Infrastructure Analyst at Old Mutual Alternative Investments 

Based in Cape Town, South Africa 

Read more...

Sustainable forestry fund seeks private equity or vc professionals 

Based in Frankfurt, Germany 

Read more...

Investment Principal for private equity fund 

Based in Nairobi, Kenya 

Read more...

Senior Legal Adviser for Old Mutual Investments 

Based in Cape Town, South Africa 

Read more...

New to AfCD this week
Infrastructure Investment Analyst for the IFC 

Based in Lagos, Nigeria 

Read more...

Investment Analyst, Manufacturing & Agribusiness for the IFC 

Based in Nairobi, Kenya 

Read more...

Junior Private Equity Research Analyst for AVCA 

Based in London, UK 

Read more...

Upcoming Conferences...

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...

Africa Investment Exchange; Energy 

London, November 24th to November 25th, 2014 

Read more...

Africa Inbound 2014 

London, November 25th, 2014 

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FT Frontier Markets Summit 

New York, December 10th, 2014 

Read more...

2015 SAVCA Annual Private Equity Conference 

Stellenbosch, February 12th to February 13th, 2014 

Read more...

Global Private Equity Conference 

Washington, DC, May 11th to May 14th, 2015 

Read more...

Africa Financial Services Investment Conference 

Brighton, May 12th to May 15th, 2015 

Read more...

And finally...
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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