March 23, 2015 
The  weekly roundup of Africa's Private Capital news


 

Each week we sift through most Africa-related private equity, infrastructure and venture capital deal news stories, market opinion articles and information pieces and winnow them down to those we feel are the most important and interesting for investors, companies and their advisors.  Here's the latest issue, covering all happenings over the last 7 days.  We hope you find the service useful.  We'd be delighted if you shared it with any interested colleagues and/or partners.  If they would like to receive their own weekly copy, they're more than welcome to sign up here.   
 
As ever, if you'd like to get in touch or share any tips or comments, please contact me  at acunningham@africacapitaldigest.com.  Many thanks for reading.
This week's issue supported by...             
AFSIC Banner Ad
The week in  brief...

Once again last week was a little light on private capital deal activity in Africa.  By far the biggest private equity investment of the week was Public Investment Corporation's announcement of their deals in Ilangethelu and Xina Solar One, two solar power developments in South Africa's Northern Cape.  The financing is a mixture of equity and debt, with some $366 million earning PIC a 20% stake in each of the developments, and the balance of almost $50 million being provided as debt. The deal represents the largest equity investment in South Africa's solar power infrastructure to date. Once operational, the power stations are expected to contribute 200MW to the national electricity grid.


 
In an exit for Mineworkers Investment Company, (MIC), South African hotel chain Sun International agreed to acquire Peermont Group in a deal worth nearly $775 million.  In April 2007, MIC led a consortium of management and community trusts in a buy-out of the Casino and Leisure group.  Sun intends to issue shares to Peermont's existing shareholders and roll-over existing debt.  In order to finance the acquisition, Sun will hold a rights offer and take on fresh debt.


 
In news of another potential exit, Bloomberg reports that Actis is working with Morgan Stanley to explore a potential sale of their portfolio company Emerging Markets Payments, which could realize a $400 million sale price. Sources tell them that The Abraaj Group and Helios Investment Partners are among the possible bidders.  A formal bidding process for the firm cold kick-off before the end of this month.


 
Meanwhile in other private equity investment news, AfricInvest is taking a minority stake in Nigerian agricultural commodities company Elephant Group.  Terms of the deal have not been reported.  The capital will be used to help Elephant Group expand its market share and take advantage of opportunities created by the Nigerian government's drive to improve agricultural productivity as well as boost its share in agricultural commodities trading.


 
On the fundraising front, Mauritius-based private equity fund manager Xterra Capital announced the launch of the Xterra Africa Property Fund, a $300 million real estate fund targeting Africa-based opportunities in Mixed Use developments as well as the Commercial, Retail and Hospitality verticals within the real estate sector.  The fund anticipates partnering with a number of Africa's  large, reputable developers to build and secure a pipeline of prime development projects across the continent, including Cote d'Ivoire, Ghana, Kenya, Namibia, Nigeria, Rwanda and South Africa.  It plans to invest in up to 20 projects and claims to have identified a pipeline of development-ready opportunities exceeding $2.5 billion in value.


 
Two new tech-focused funds were announced last week.  Leap Ventures, a new, $71 million MENA-focused venture fund, has been launched by four of Lebanon's most seasoned entrepreneurs and investors.  The fund plans to make Series B investments between $3 million to $7 million in growth-stage companies.  And Sawari Ventures announced the launch of Sawari Ventures Fund I, a new $50 million venture fund targeting growth stage tech startups in Egypt, Morocco and Tunisia. The fund is expected to close by the end of the year and to start deploying capital in early 2016.


 
There are a number or DFI-related transactions in the news, both actual and planned.  The European Investment Bank announced an agreement to extend a $130 million line of credit to the National Bank of Egypt to help develop the bank's lending capacity to the country's small and medium-sized enterprises, (SMEs).  The IFC announced a $13.5 million investment in a steel mill, MMI Integrated Steel Mills Mozambique, based in the Port of Nacala's Special Economic Zone in northern part of the country, which will manufacture high quality galvanized, color coated roofing sheets, and is expected to create 250 jobs in the area. In a separate, potential transaction, the IFC is also considering investing $6 million in Business Partners' new International East Africa fund.  The investment would be a straight equity investment in the fund, which is expected to have $30 million in capital and target SMEs in Kenya, Rwanda and Uganda who lack access to long-term financing.


 
Finally, a couple of interesting profile pieces this week. In the first, a Q&A with Kuramo Capital's Wale Adeosun and Africa Sunrise Partners' Melissa Cook, both member of the President's Advisory Council on Doing Business in Africa or PAC-DBIA.  They talk about the Council's goals and progress as well as give perspective on the risks and rewards of doing business in Africa.  In the second, a profile of financial services private equity investor LeapFrog Partner's approach to risk management and governance of its portfolio companies in Africa.  Both give lots of food for thought.


You can review these and other stories by 
scrolling  down and reviewing the headlines, abstracts and links. 
Deal News...
Private Equity
PIC invests $415 million in 2 Northern Cape solar power projects  // bdlive.co.za
In a combined equity/debt deal, South Africa's Public Investment Corporation is investing approximately $366 million for a 20% stake in each of the Ilangelethu and Xina power station developments in the country's Northern Cape, as well as providing almost $50 million in debt.  The deal represents the largest equity investment in South Africa's solar power infrastructure to date. Once operational, the power stations are expected to contribute 200MW to the national electricity grid.
Private Equity
AfricInvest takes stake in Nigeria's Elephant Group  // vanguardngr.com

Private Equity firm AfricInvest is taking a minority stake in Nigerian commodities company Elephant Group.  Terms of the deal were not reported.  The capital will be used to help Elephant Group expand its market share and take advantage of opportunities created by the Nigerian government's drive to improve agricultural productivity.

Private Equity
Sun International acquires MIC-backed Peermont group  // reuters.com

South African hotel chain Sun International has agreed to acquire casino operator Peermont Group in a deal worth nearly $775 million.  In April 2007, Mineworkers Investment Company, (MIC), led a consortium of management and community trusts in a buy-out of Peermont.  Sun intends to issue shares to Peermont's existing shareholders and roll-over existing debt.  In order to finance the acquisition, Sun plans to hold a rights offer and raise on additional fresh debt.

DFI
EIB makes $130mln loan to boost SME lending in Egypt  // africacapitaldigest.com

The European Investment Bank, (EIB), is extending a $130 million line of credit to the National Bank of Egypt to help develop the bank's lending capacity to the country's small and medium-sized enterprises, (SMEs).  The announcement was made following the conclusion of Egypt's Economic Development Conference.

DFI
IDC invests $140mln in hotels in Ghana and Uganda  // bdlive.co.za

IDC, the South African DFI has invested approximately $120 million in hotels in Ghana and Uganda as part of its mandate to help local companies by creating opportunities for them to export their goods and services to the rest of the continent.

DFI
IFC invest $13.5mln in Mozambique's MMI Steel mill  // africacapitaldigest.com

The IFC has announced a $13.5 million investment in a steel mill, MMI Intergrated Steel Mills Mozambique, based in the Port of Nacala's Special Economic Zone in northern part of the countryThe plant will manufacture high quality galvanized, color coated roofing sheets and related products used in low-cost building projects, and is expected to create 250 jobs in the area.  Previously, products and materials for Mozambique's housing sector were mostly imported.

DFI
IFC mulls $6mln investment in new SME-focused fund  // africacapitaldigest.com

The IFC is considering investing $6 million in Business Partners International East Africa, a greenfield private limited liability company that will provide tailored financing solutions to underserved SMEs in East Africa.  The disclosure was made in a Summary of Investment Information or SII on the IFC's website last week.


Source Abengoa
South Africa's PIC takes a 20% equity stake in Xina Solar One project being developed by Abengoa
Image Credit: Xina Solar One
Fund & Financing News...
Private Equity
Xterra Capital looks to raise $300 million for real estate  // africacapitaldigest.com

Mauritius-based private equity fund manager Xterra Capital announced the launch of the Xterra Africa Property Fund, a $300 million real estate fund targeting Africa-based opportunities in Mixed Use developments ad well as the Commercial, Retail and Hospitality verticals within the real estate sector.  With rapidly-growing economies, rapidly-changing urban environments and increasing levels of wealth among its 1 billion people, the continent is an attractive real estate investment destination. 

Read more...

Private Equity
Leap Ventures launches with $71mln for MENA startups  // dailystar.com

Leap Ventures, a new, $71 million MENA-focused venture fund, has been launched by four of Lebanon's most seasoned entrepreneurs and investors.  The fund plans to make Series B investments between $3 million to $7 million in up to three companies each year, and help them grow to establish a regional or global presence. 

Read more...

Private Equity
Sawari launches $50mln North African tech startup fund  // wamda.com

Sawari Ventures announced the launch of a new $50 million venture fund at Egypt's recent Economic Development conference at Sharm el Sheikh.  The fund, Sawari Ventures Fund I, is expected to close by the end of the year and to start deploying capital in early 2016.  It will target growth stage tech startups in Egypt, Morocco and Tunisia, and expects to invest between $2 million to $3 million in twelve to fifteen companies over the 4-year life of the fund. 

Read more...

Private Equity
New funds to help SMEs turn from renters to owners  // bdlive.co.za

Johannesburg-headquartered finance company Business Partners is launched two property sector funds last week to help SMEs own the premises in which they operate. The new funds will enable SMEs, across all sectors, to get financing to acquire or refinance properties worth up to $9 million. 

Read more...

Private Equity
Carlyle raises $2.5bln international energy fund  // bloomberg.com

With commitments from 160 investors, Carlyle group has closed a new $2.5 billion energy fund, handily beating its targeted close of $1.5 billion and the largest ever first-time in the firm's history. Well-timed to take advantage of depressed valuations caused by the slump in the price of oil, Carlyle International Energy Partners has already made a number of investments, including Discover Exploration, an oil exploration company focused on Africa.  The fund will invest exclusively outside the U.S.

Read more...

Credit
Senegal to tap international bond market for $500mln in 2015  // bloomberg.com

The West African country's President, Macky Sall, tells Bloomberg that he expects the government to tap the international bond markets for $500 million in 2015, in all likelihood before the end of July.  The securities issuance would either be Eurobonds or sukuk.  The country, less affected by declining oil prices and currencies compared to Nigeria and Ghana, is expected to grow by 5.4% this year.

Read more...

This week's issue also supported by...             
TMT MENA 2015
Projects & Portfolio Companies...
Private Equity
Abraaj, Helios possible bidders for Actis-backed EMP  // bloomberg.com

Bloomberg quotes sources as saying that The Abraaj Group and Helios Investment Partners are possible bidders for Actis backed-Emerging Markets Payments, the payments firm servicing more than 130 banks and 30,000 customers in the Middle East and Africa.  Actis is working with Morgan Stanley to explore a potential sale of the firm, which could realize a $400 million sale price.  A formal bidding process for the firm could kick off before the end of March.

Sectors & Strategies...
Private Equity
Eberhart Capital scouts for deals in Africa  // howwemadeitinafrica.com
US-based Eberhart Capital is on the look oil for investment opportunities in Africa, specifically within the logistics, construction and agribusiness sectors, all areas in which the firms has operating expereience.  Dan Eberhart, the fund'Managing Partner, sat down with How we made it in Africa to discuss where he sees opportunity and what criteria the fund looks for in potential investments.
e-Commerce
Online shopper number in South Africa to "nearly triple"  // disrupt-africa.com

Recent research undertaken by global market research firm IPSOS on behalf of PayPal and FNB point to significant levels of increased interest in shopping online by South Africa's consumers.  While e-commerce penetration rates in the country are relatively low compared to other parts of the globe, the number of online shoppers in South Africa is expected to nearly triple.

Exclusive reader offer...             
The 2015 Guide to sub-Saharan Private Equity
Reserve today for 30% savings with pre-publication price
Make sure you reserve your copy of AfCD's definitive guide to the private capital investors, funds and investment firms in sub-Saharan Africa.  Once published in April, enjoy the following key benefits:
  • For LPs; review SSA GPs, their strategies and their funds  
  • For GPs; find potential co-investors, plan secondary acquisitions and sales 
  • For Corporates; source assets for acquisition, targets for divestitures
  • For Advisers; develop clients, transaction ideas and more
  Contact Teresa Hall at thall@africacapitaldigest.com   to reserve your copy today.

Trends & Perspectives...
Trends - Sovereign Debt
Islamic Bonds find favor in West Africa  // reuters.com

A useful summary of the key findings from AVCA's recent report and analysis of private equity activity and interest in Africa.  With deals worth some $8.1 billion last year, the total is just shy of the $8.3 billion high watermark recorded in 2007.  A diversified market, with less competition for investments in countries posting strong GDP growth have more than a fifth  of private equity funds "now expressing serious interest in investing in Africa" according to private equity veteran Marleen Groen.  

Read more...

Perspectives - Impact Investing
Gates Foundation's focus shifts from grants to impact investing  // nytimes.com

In common with other foundations, the Bill and Melinda Gates Foundation is increasingly making direct equity investments rather than awarding grants in firms that can help the foundation achieve its goals.  While such an approach is still only one of several used by the $43,5 billion foundation, the size of the direct investment program has more than tripled since it began in 2009 and now has $1.5 billion available for loans, equity investments and volume guarantees.  

Perspectives - Private Equity
Blen Abebe on private equity investing in Ethiopia  // howwemadeitinafrica.com

Setting up shop in 2008, Schulze Global Investments became the first international private equity firm to establish an office in Ethiopia.  In an interview with How we made it in Africa, SGI VP Blen Abebe talks about the opportunities and business culture in Ethiopia, the increasing competition for deals and the challenges facing investors looking to participate in this fast-growing market. 

Perspectives - Private Equity
As deal value hits a 7-year high, a view on the PE's opportunity today  // ft.com

With all the buzz around the value if Africa's private equity deals hitting 7-year highs in 2014, a recap of the fundamentals driving the trend and perspective on the risk factors of private capital investment on the continent.  While investment in Africa may not be for the faint-hearted, the perception of risk, particularly political risk, may be overblown.  And private equity receives a warmer welcome in Africa than in other parts of the world, partly due to the "benign but influential" private equity investment model taken by most firms whereby significant minority stakes and board representation rather than leveraged buyouts are used to create value.  

Companies, People & Profiles...
Profile
Q&A with PAC-DBIA Council members Adeosun and Cook  // cfapubs.org

An interesting Q&A piece featuring Kuramo Capital's Wale Adeosun and Africa Sunrise Partners', both members of  the President's Advisory Council on Doing Business in Africa, (PAC-DBIA), on the program's goals and members' perspective on the risks and rewards of doing business in Africa.  The overall conclusion is that investors and corporations need to develop a strategy now for Africa before it is too late. 

Read more...

Profile
Financial and social due diligence both critical to LeapFrog's success  // ft.com

A profile of financial services private equity investor LeapFrog's approach to risk management and governance of its portfolio companies in Africa.  Approaching and managing investments using a combination of financial and social due diligence methods and measuring performance through the life of an investment, can mean the assets fetch higher prices from emerging market investors looking for better data and increased transparency. 

Read more...

Profile
NSIA reaps rewards of dollar strategy  // bloomberg.com

Nigeria's $1.55 billion Sovereign Wealth Fund's private equity investments were very successful in 2014, according to the Nigerian Sovereign Investment Authority's CEO, Uche Orji. The fund overall had a "good year", he told Bloomberg, having weighted its portfolio of equities, private equity and fixed-income investments towards dollar assets.  He declined to be more specific about the fund's private equity asset performance prior to the release of the fund's annual report in the coming weeks. 

Read more...

Current Job Postings...
Highlighted Jobs...             
Non Executive Board Members for Innovation Group  

Based in Johannesburg, South Africa

Read more...

Investment Director for pan-African Private Equity fund 

Based in London, UK

Read more...

Senior Associate at Helios Investment Partners 

Based in London, UK

Read more...

Investment Analyst at Arkesden Partners

Based in Nairobi, Kenya

Read more...

Consulting Leadership opportunities at Deloitte  

Several locations in Africa

Read more...

Investment Executive, Business & Support at GroFin 

Based in Pretoria, South Africa

Read more...

Upcoming Conferences...
Highlighted Event...             
Africa Pensions & Sovereign Funds Investment Forum 

New York, June 8th to June 12th, 2015 

Read more...

Powering East Africa  

Nairobi, March 25th to March 27th, 2015 

Read more...

Africa GRI 2015  

Johannesburg, April 21st to April 22nd, 2015 

Read more...

TMT MENA 2015 

Dubai, April 22nd, 2015 

Read more...

12th Annual AVCA Conference  

London, April 27th to April 29th, 2015 

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...

CEO Infrastructure Investment Summit 

Cape Town, June 3rd, 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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