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Weekly Wrap, January 16th, 2017; Quantum Global, CDG Private Equity, IFC and others make private capital news last week

Last week in brief…January 16th, 2017

We were reminded of possibilities of Africa’s hospitality sector investment potential for private equity last week with the announcement of Quantum Global Africa Investments Africa Management‘s acquisition of the Mövenpick Ambassador Hotel in Accra from Kingdom Holding Company for a total enterprise value of $100 million. The deal, which closed at the end of December, is the largest open market hotel transaction in sub-Saharan Africa to date.

It marks the second investment for QG Africa Hotel LP,  Quantum’s $500 million hospitality fund, which made its debut investment in March 2016, acquiring the Lusaka InterContinental from Kingdom Holding in a $36 million deal. Located in Accra’s central business district, the Mövenpick Ambassador Hotel is the largest 5-star property in Ghana, attracting both international travelers and affluent Ghanaians, all key criteria underpinning Quantum Global’s investment decision. The hotel has a strong operational track record of growth, which positions it well to capitalize on the expected expansion in the hospitality market in Africa.

We move to North Africa for news of another significant private equity deal last week. CDG Capital Private Equity has successfully exited regional outsourcing company Intelcia is a sale to multinational Altice Group, earning 4.6x money on its investment.

CDG originally backed Intelcia in 2010, when the firm posted revenues of approximately $20 million, Since them through a series of acquisitions, Intelcia has grown dramatically, delivering over $125 million in sales in 2016. Today Intelcia has operations in Morocco, France, Cameroon and Senegal, employing more than 7,000 employees, making it one of the largest French-speaking outsourcing companies.

In Benin, impact investor The Moringa Partnership announced an equity investment in Tolaro Global, a processor and exporter of cashew nuts. The capital will be used to help Tolaro expand its development of sustainable and ethical cashew production. The company aims to increase its cashew processing capacity to 20,000 tonnes by 2021, a significant leap from the 2,500 tonnes processed in 2016. In addition, Tolaro is looking to set up a salting and roasting unt, thereby becoming the first company in West Africa to export 100% “Made in Africa” cashew end products.

A couple of items regarding private equity-backed portfolio companies also caught our eye last week. In the first, Jumo World, which counts LeapFrog Investments, Vostok and Gemcorp among its backers, is selling its stake in afb Ghana, one of the country’s largest consumer and micro lending institutions, to DPI-backed Letshego Holdings in an undisclosed deal.

And secondly, the IFC is mulling a €20 million loan to Bounty Brands, the consumer goods platform owned by South African private equity investment holding company Coast2Coast. The debt will be used to support the company’s acquisition plans and regional expansion activities over the next few years in preparation for an eventual IPO.

According to the Summary of Investment Information published on the IFC’s website, Bounty Brands is looking to acquire food, personal and home care manufacturers in Central and Eastern Europe as well as  in South Africa. The plans are a continuation of a strategy that has seen Bounty snap up a number of consumer goods assets in the past couple of years.

There were no fund raise launches or closes last week, but there was news of two new investment firm launches. Reuters reports that Marlon Chigwende and Kayode Akinola, both Africa heads of leading global private equity firms, (Carlyle and KKR respectively), are teaming up to launch Arkana Partners to invest in mid-cap investment opportunities on the continent. The new firm will look for businesses which have the capacity to absorb $100 million in capital, with its main focus will being on those companies looking for between $20 million to $60 million of fresh equity.

Lateral Capital, a new private investment firm focused on opportunities in early-stage and growth ventures in sub-Saharan Africa, has been formed via the merger of U.S.-based investment firm Emergo Partners and Frontier Dawn Partners, a U.K. holding company. The new investment vehicle, which is structured as a pledge fund, will make investments across the capital table, and allow investors to participate in direct private investments at the asset level.

In Policy and Regulation news, CDC, the UK’s development finance institution, has published a review of the CDC bill which was due to have its third reading in the UK Parliament last week. The review highlights the aims and achievements of the group to date in support of the bill which proposes to increase the amount of capital managed by the DFI.

And finally, Europe’s geographical, historical, cultural and ethnical proximity to Africa means it should be playing more of a leading role in as an underwriter and supplier of infrastructure finance and services to the continent. Citigroup‘s Miguel Azevedo argues in the Financial Times for the creation of an African Infrastructure Investment Bank to help reignite the presence, influence and partnership of Europe in Africa.

As always, you can review these and other stories by clicking through to this week’s complete issue of Africa Capital Digest.

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