Last week in brief…December 7th, 2015
Deals in food retail and distribution companies seemed to dominate private capital investment news in Africa last week. Not surprising, we suppose, given that it’s one of the largest consumer sub-sectors, growing between 9% and 10% annually in recent years. Private Equity investor Actis is spending $54 million to acquire a significant minority stake in Food Lover’s Market, one of Africa’ largest independent food retail groups. It operates more than 120 stores in 11 countries selling fresh produce and a complementary range of bakery, grocery, butchery and deli products. In addition, the firm operates over 200 FreshStop convenience stores in Caltex service stations as well as Market Liquors, a convenience liquor offering, an import export business and a recently-acquired artisinal coffee brand, Seattle Coffee. The exact size of the stake and valuation details of the transaction remain undisclosed at this point.
Meanwhile, investment holding company Coast2Coast agreed to two food-related transactions last week through its consumer brand platform Bounty Brands. Both deals turned out to be first for C2C, most notably its investment in Poland’s Sonko, a producer of rice cakes, rice, groats and dry bread products, which is the company’s first investment overseas. It seems that Coast2Coast and Bounty Brands will now set up an office in Europe to pursue complementary acquisitions as part of their overall strategy to diversify earnings. And in their second first, Coast2Coast and Bounty made their debut investment in South Africa’s food sector with the acquisition of a stake in Liberty Foods, a food importer and distributor. Together, the two food acquisitions are expected to add R850-million ($59 million) a year to Bounty’s annual revenue, bringing total revenue to just short of R2-billion ($139 million). The deals form part of the company’s strategy to grow revenue to over R5 billion in the next two years in the run-up to an eventual listing.
In other consumer sector-focused deals, Old Mutual Private Equity has acquired a 70% stake in MoreCorp, a South African Golf and Cycling retailer, for R300 million or approximately $21 million. The transaction, which is being made through the private equity arm’s R4 billion Fund IV, is seen as being a bet on the resilience of the country’s upper-middle class in the face of South Africa’s current economic downturn. And AfricInvest, the Tunis-headquartered mid-cap private equity firm has completed the acquisition of a minority stake in Salvador Caetano Auto Africa, an auto distributor and retailer that has been active in a number of high-growth African markets since 1990. Again terms of the deal were not disclosed.
Meanwhile, M-KOPA, a pay-as-you-go rooftop solar provider, has landed $19 million in its latest round of funding. The capital will be used to expand the company’s management team as well as support the development of the firm’s product range and its international operations. This latest round was led by Generation Investment Management, a fund founded by former United States Vice President Al Gore and David Blood. Virgin’s Richard Branson and AOL’s Steve and Jean Case are also among the new investors in the round, which also saw a number of reinvestments from existing shareholders.
In fundraising news, CrossBoundary Energy announced the first close at $8 million for its first fund, CrossBoundary Energy Fund I, which, after leverage, aims to invest over $25 million in solar assets in the next 18 months. The 20-year fund does not have a targeted number of projects, but expects to make between 10 and 15 investments over the next 12 to 18 months. Typical investment size is anticipated to be between $1 million and $2 million, but could vary substantially, ranging from as low as $200,000 for smaller clients up to $10 million or more for larger systems required by industrial and mining projects. The fund, which has a hard cap of $10 million in equity, is a pilot fund targeting infrastructure level returns and is designed to demonstrate the potential of the asset class in Africa, acting as a pre-cursor to the raise of a larger fund.
And finally this week, an interesting piece in the Financial Times penned by Aubrey Hruby, co-founder of the Africa Expert Network, on the five common myths about China’s relationship with Africa which have now become assumptions even at the highest levels of policy-making. She neatly debunks them for us.
As always, you can review these and other stories by clicking through to this week’s complete issue of Africa Capital Digest.