Last week in brief…March 25th, 2015
Reported and announced deal activity in Africa’s private equity, infrastructure and venture capital sectors was a little on the light side last week. With the AVCA conference in London followed closely by the EMPEA conference in Washington, D.C. both taking place over the last few weeks, perhaps dealmakers were busy sourcing fresh deal flow instead. That’s not to say that nothing notable happened. It did.
On the fundraising front, Pembani Remgro Investment Managers held a first close at $245 million for their infrastructure fund. They started raising the fund officially in May last year, and have received commitments from a healthy mix of development finance institutions, private pension funds, family offices and private investment companies. According to the press release, Britain’s CDC Group made a significant anchor investment in the fund. The management team are aiming to hit $500 million for the final close later this year, and are already well on the way to meeting their goal with a commitment from the Overseas Private Investment Corporation (OPIC) which has committed an amount equal to 20% of the fund size, capped at $100 million.
OPIC and CDC were not the only DFIs who were active last week. The International Finance Corporation (IFC) announced it was making a $10 million commitment to Wamda Capital’s planned $75 million MENA Venture Fund. In a Form D filed with the U.S. Securities & Exchange Commission in February this year, Wamda announced that it had raised $55.7 million from twenty-six LPs, so this latest commitment gets them a lot closer to their goal. The fund aims to make between five and seven seed investments per year in promising tech startups in Egypt, Lebanon, Jordan and a number of other countries and help foster economic growth and drive job creation across the region, by encouraging entrepreneurs to start-up new businesses.
In other IFC-related news, a Summary of Investment Information on their website describes a potential $300 million debt financing deal with Vitol Upstream Ghana, the West African subsidiary of Swiss multinational energy and commodity trading company, Vitol Group. The financing would support Vitol Ghana’s share of the total project cost of a planned joint venture with Eni Ghana Exploration and Production (Eni) and the Ghana National Petroleum Corporation (GNPC) to develop the $7.3 billion Offshore Cape Three Points deep water project located almost 60kms off the West Ghanaian coast. Vitol Ghana will hold a 35.6% interest in the project, and the debt financing would go some way to help reach the aggregate debt financing package required by the company’s $1.2 billion share of the project. IFC’s Board of Directors are expected to consider the investment on July 23rd, 2015.
The biggest private equity investment of the week came from South Africa. The Public Investment Corporation, acting on behalf of the country’s $150 billion Government Employees Pension Fund, paid $149 million for an undisclosed minority stake in Bayport Financial, a consumer lender providing unsecured loans to customers in developing markets, the majority of which are in Africa. The company was founded in 2001 and now has over 6,700 employees servicing over 500,000 customers through 405 branches in 9 countries in Africa and Latin America. Other significant private capital investors in Bayport include Investment AB Kinnevik and Helios Investment Partners, as well as the company’s founders. The transaction is expected to close by the end of May 2015, subject to certain conditions.
There were a couple of interesting trend and perspective pieces we think are worth taking a look at were published last week. A report from Moody’s Investor Services predicts that Africa’s maturing telecoms sector looks set for further consolidation. They expect African nations with 4 or more operators or those with operators owning less than 15% of the market to be more likely to see more deal activity driven by the need for in-market consolidation. Some operators will need funding to fulfill their M&A ambitions, which may be particularly tough for those smaller operators with significant operational exposure to sub-investment grade countries and regions in East, West and southern Africa. And the Brookings Institution published a report looking at the growth and change in composition of external financial flows to sub-Saharan Africa over the last 25 years. It is interesting to see how the composition of these flows has changed over the years.
And finally, Grinnell College, one of the first U.S. Colleges to invest in Africa, has topped the performance ranks for 2014 by posting a 20.4% return for the year. While the success of their African investments are hard to gauge given their relative immaturity, “…we think they are very compelling”, the endowment’s CIO Scott Wilson tells Marketwatch. It provides an interesting snapshot on the key strands of their investment strategy.
You can review more on these and other stories by clicking through to the full issue of this week’s newsletter.