Last week in brief…August 22nd, 2016
Deals inspired by the rise of the Africa’s consumers were the order of the day last week. A consortium of made up of a couple of private equity investors and a development finance institution made the largest capital commitment of the week. 8 Miles led an $80 million club deal in Nigerian biscuit manufacturer Beloxxi, joining forces with Lagos-based African Capital Alliance and German development finance institution DEG in a bet that rising populations, increasing incomes and levels of urbanization will continue to drive levels of growth within the biscuit sector which has expanded at rates of 10% to 15% in recent years. DEG confirmed it was investing $10 million in the deal, but details on how the balance was split between the other two members of the consortium were hard to come by.
A potential investment by the IFC in South Africa’s fiber networking sector could be a little larger, in dollar terms, than the Beloxxi. The DFI is considering an investment made up of equity and quasi-equity and totaling $111 million for a stake in the special purpose vehicle that will be set up to hold the combined interests of Liquid Telecom and Royal Bafokeng Holdings’ planned $560 million acquisition of Neotel. With over 24,000 kms of long distance backbone servicing 12 countries, Liquid Telecom has major operations in Kenya, Nigeria, Rwanda, South Africa, Zambia and Zimbabwe. Tata Communications, Nexus Connexion and CommuniTel have already agreed to sell Neotel following a recent competitive bidding process, so it seems likely that the IFC’s board will approve the investment when they meet to review it in mid-September.
In the latest news of a slew of investments, African Rainbow Capital, the private equity investment company set up by Patrice Motsepe, recently announced that it will invest R120 million or approximately $9 million to acquire 29.9% of CMB International, the Mauritius-listed financial services holding company which acquired investment banking and advisory firm Bravura in December 2015.
The capital will be used to support the firm’s acquisition plans and other growth initiatives. CMB International was originally incorporated in August 2015, since when it has acquired six financial services businesses. The companies provide a range of corporate finance, structured solutions and property investment services to their clients in Southern African and Australia.
South African fintech startup Zoona has successfully closed a $15 million Series B round, raising capital from a number of new as well existing investors. The round was led by the IFC, which provided $7.5 million in funding, while new investors 4Di Capital and Google CFO Patrick Pichette joined Series A backers Quona Capital, Omidyar Network and Lundin Foundation in providing the balance of the round. Additional terms of the deal were not disclosed.
An article that first appeared in EMPEA’s Summer Legal & Regulatory Bulletin caught our eye last week. Folake Adebowale, a Partner at Nigerian law firm Udo Udoma & Belo-Osagie, looks at the impact the measures adopted by the Central Bank of Nigeria to manage access to the official foreign exchange market will have for foreign investors. The key change for private equity investors is that they are now able to convert capital into Naira at market-determined rather than central bank-determined rates.
On the jobs front, Arise, a $660 million private equity investment holding company established by FMO, Norfund and Rabobank, is about to embark on an aggressive hiring campaign in order to support its operations which are scheduled to start in January 2017. Deepak Malik, Norfund’s Regional Director for Southern Africa tells Bloomberg that the financial services-focused investment company is looking to hire between 20 and 25 people over the next 6 months to help manage its portfolio of investments and deploy another $300 million on acquisitions.
And finally, it’s being reported that Marlon Chigwende, Managing Director and Co-Head of private equity giant Carlyle‘s business in Sub-Saharan Africa, is leaving the company to set up his own fund to pursue investment opportunities across the continent. He joined Carlyle in 2011, the same year which saw the launch of the Carlyle Sub-Saharan Africa Fund. We’ll keep you updated as both this story and his plans evolve.
As always, you can review these and other stories by clicking through to this week’s complete issue of Africa Capital Digest.