Weekly Wrap, June 25th, 2018; Abraaj, TLcom, Norfund and others make private capital deal news last week

Last week in brief…June 25th, 2018

The big news in Africa’s private capital world last week was undoubtedly the agreement struck by Los Angeles-based Colony Capital to acquire a number of The Abraaj Group’s funds. The funds in question are Abraaj’s North African, Sub-Saharan African, Latin American and Turkey Funds a well as the emerging markets investor’s limited partnership positions in these funds.

Colony has also agreed to operate those Abraaj funds it is not acquiring on an interim basis to provide stability for their stakeholders while their fate is determined. Among them is Abraaj’s $1 billion Healthcare Fund, some of the LPs of which allege has been mismanaged by the emerging markets private equity group. That charge continues to be emphatically denied by Abraaj. The uncertainty caused and controversy swirling around the group over the last six or seven months ultimately led to Abraaj petitioning for provisional liquidation in the Grand Court of the Cayman Islands earlier this month.

The acquisition is an interesting strategic move from Colony Capital who, until this point, have had little or no exposure to private equity investments in emerging markets. The firm is primarily a real estate investor with global property holdings in the healthcare, industrials and hospitality sectors, and today manages $43 billion of assets and employs about 500 people in offices across ten countries. As far as we can see, this is gives them their first foothold in Africa, making them at one fell swoop one of the continent’s largest and most important private capital investors.

There were no other confirmed deals last week, just the hint of one. TLcom Capital, the IFC and and a group of as yet unnamed investors are mulling a deal for Kenya’s Twiga Foods. According to the Statement of Investment Information on the IFC’s website, the investor group is considering an investment totaling $7 million in the mobile-based supply platform for retail outlets, kiosks and market stalls. Of the $7 million, the IFC would put up $3 million if the investment is approved later in July.

Twiga last raised capital when it closed its $10.3 million Series A investment in July 2017 in a round led by Wamda Capital. The company’s solution allows vendors to buy fruit and vegetables from Twiga using their mobile phones, who then deliver the ordered produce supplies directly to the retailers’ stalls. By leapfrogging traditional supply chains, the company reduces costs, optimizes just-in-time delivery, thereby minimizing waste.

There was some fundraising activity last week. Climate Fund Managers held the third close for Climate Investor One, a global climate fund last week. The close adds three new investors to the fund’s roster of LPs, who between them have committed a further $75 million to the fund, bringing the total raised so far to $535 million. Ultimately, Climate Investor One is hoping to raise $1 billion by its final close, 40% of which is likely to be allocated to projects in Africa.

GML Capital and Trade Development Bank are teaming up to launch a significant open-ended trade and loan fund. The two organizations have set up ESATAL, a 50/50 fund management joint venture which will finance short-term trade-related transactins on behalf of entities operating in the 20 member countries of the TDB.

The fund will launch with $100 million in commitments and, it’s hoped, will grow quickly given its appeal to Africa-focused institutional investors who understand the strong appetite for trade finance on the continent and are looking for the lower risk profiles associated with the asset class. The fund is targeting returns equivalent to LIBOR plus 3% to 5% after all fees and expenses.

Norfund, Shuraako and IFU, the Danish DFI, have launched a new impact fund for Somalia. The Nordic Horn of Africa Opportunities Fund is an $8 million fund which will target investments in small and medium-sized companies in Somalia. Investments will typically be in the form of Shariah-compliant loans and other self-liquidating structures in businesses that will have a positive impact, particularly on job creation and female empowerment in the East African country.

Finally, Norfund has ended its search for a new CEO following Kjell Roland’s resignation in March this year. The board of Norway’s development finance institution announced that it is appointing Tellef Thorleifsson, who has an investment career spanning more than 20 years under his belt, to the position. He is expected to take up the reins by October this year.

That’s it for this week. As always, you can review these and other stories by clicking through to this week’s edition of the newsletter.

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