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Weekly Wrap, January 12th, 2015; Helios, Sahel Capital, Actis and more make private capital news last week

The week in brief…January 12th, 2015

We had to wait until the end of the week for the most notable news in Africa-focused private equity; namely Helios Investment Partners‘ record $1 billion-plus fund dedicated to opportunities in Africa which hit on Sunday, just before this week’s issue went to press.  It’s the private equity firm’s third fund and is expected to wrap up with $1.1 billion in commitments. About 60% of the fund was raised from existing investors in the buyouts firm’s prior funds.  Co-Founder Tope Lawani tells the Financial Times that the size of the raise and the participation by more pension funds and sovereign wealth funds in the fund is another sign that private equity in Africa is maturing.  Given that the total amount of capital raised by buyout groups for Africa funds totaled $3.3 billion in 2013, (Source: EY),  this fundraising news puts the industry in a good position to be able to exceed that total this year.  And perhaps handily beat 2007’s all time record of $4.7 billion?

To help reach that goal, Indian private equity firm Sage Capital announced last week that it is looking to raise $1 billion to target opportunities in the GCC, India and Africa.  While details on what proportion of the planned fund would be allocated to opportunities in Africa were not reported, the firm’s Managing Partner tells Gulf News that the continent’s technology sector offers some “very exciting investment prospects.”  It’s expected that the fund will roll out in the second half of the year.

In deal news last week, Sahel Capital made its first investment from its $100 million FAFIN fund by taking a 25% stake in Nigerian dairy producer and processor L&Z Integrated Farms.  The capital will be used to expand the firm’s production and processing capacity. Meanwhile sources told Bloomberg that Actis is preparing to sell its stake in Actom.  The deal could value the electrical engineering firm at more than $1 billion.  In other exits, a consortium including Brimstone and Capitalworks realized a $24.5 million exit through the sale of the diagnostics business of The Scientific Group to South African healthcare company Ascendis. The deal is Ascendis’s third medical device acquisition in the last 12 months. And in Kenya, Centum Investment agreed to sell its stake in regional insurance company UAP Holdings to Old Mutual. The deal is the latest in Old Mutual’s planned $500 million programme to acquire businesses in sub-Saharan Africa.

Throughout the week last week, a number of countries announced their intentions to tap the credit markets during 2015 to help fund the mountain of planned infrastructure development projects. Tanzania topped the rankings with plans for to issue a Eurobond in March to fund up to $1 billion in infrastructure upgrades. Cameroon will be raising $582 million through the sales of treasury bills and medium term notes. And Ghana, looking to restructure its debt to longer term maturities plans on issuing a $120 million 7-year bond in April. It’ll be interesting to see what it’ll take for then to raise the funds given the retreat in commodity prices and expected tightening by the US Federal Reserve.

To wrap up, a number of nuggets for everyone to chew on.  According to Mergermarket deal activity in the Middle East and Africa bucked the trend in the fourth quarter of last year, jumping 158% from the third quarter.  The momentum promises to carry through to this year.  There were a number of interesting perspective pieces published last week, from a guest post by Standard Bank’s David Humphrey on the wall of money waiting to invest in bankable infrastructure projects, USAID’s Andrew Herscowitz on the evolving relationship between the development and financial worlds to David Munnich and Hugues Vincent-Guenon of I&P on sustainable investment models for Africa’s SMEs.  All well worth the read.

You can review these and other stories by clicking through to this week’s edition of Africa Capital Digest.

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