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Weekly Wrap, November 30th, 2015; Abraaj, IFC, Old Mutual and others make private capital news last week

Image Credit: Brookhouse School

Last week in brief… Last week saw The Abraaj Group realize two Africa-related private equity exits. The first, Saham Finances, was sold to two organizations; Sanlam Group, the South African financial services company and Saham Group, a Moroccan conglomerate and Saham Finances’ parent company.  The IFC and the IFC’s Africa, Latin America and Caribbean Fund (ALAC Fund) exited their stakes alongside Abraaj, providing the acquirers with the opportunity to buy a combined 37.5% stake in Saham Finances. Since investing in the company in 2012, Abraaj and the IFC have helped Saham to become one of the largest pan-African insurance groups, currently operating 31 insurance and reinsurance subsidiaries in 26 countries on the continent and in the Middle East. The company is now the market leader in most of the countries in which it operates, with a network of over 650 branches, a staff complement of more than 3,000 people, and a consolidated turnover of over $1 billion. Bloomberg reports that Sanlam is paying $375 million for the 30% stake it is acquiring, making it one of the larger private equity exits of the year.

For its second exit of the week, American private equity firms Warburg Pincus and General Atlantic have agreed to acquire Abraaj’s 49% stake in Network International, a payment processor with operations in the Middle East and Africa. Terms of the deal were not disclosed. Abraaj originally invested in the firm in 2011 and supported the company’s growth by augmenting its senior management team, by helping product and geographic diversification and by facilitating greater market access to the sub-Saharan region. The deal is expected to close once regulatory approval has been given.

Meanwhile, in other deal news, Old Mutual Alternative Investments has reached an agreement to acquire the 50% of African Infrastructure Investment Managers (AIIM) that it does not already own from joint venture partner Macquarie Infrastructure and Real Assets. Once again, terms of the deal were not disclosed. AIIM was established in 2000 as a 50/50 joint venture between the two companies, and since then has developed into one of Africa’s leading infrastructure investment managers with over $1 billion under management across five infrastructure funds. AIIM is expected to continue to operate as an autonomous business, sourcing and executing deals from its offices in South Africa, Kenya and Nigeria.

In another financial services sector deal last week, private equity firm Actis announced that it is spending $62 million to acquire a majority stake in Sigma Pensions in partnership with the CEO and management of the Nigerian Pension Fund Administrator. Neither the size of the stake nor the valuation terms of the deal were disclosed. Sigma was founded in 2004 and, working from 11 offices and 32 service centers, currently has over 650,000 customers. To date, Actis has invested more than $570 million in opportunities in Africa’s financial services sector.  The private equity firm sees significant potential in the continent’s asset management industry, as a young, growing population start to save and invest for the future.

In fundraising news last week, Novastar Ventures announced that it had held the final close for Novastar Ventures East Africa Fund I at the end of September, hitting its $80 million target with a commitment from FISEA, an investment fund advised by PROPARCO, the French development finance institution. The fund, which was launched in 2013, has already backed eight businesses, all of which demonstrate the characteristics favored by the fund—mass-market scale potential, business model innovation and entrepreneurial leadership. By meeting proven demand for basic goods and services with innovative business models that widen access, improve quality and lower the cost of basic goods and services, the fund aims to achieve positive social impact as the result of its portfolio companies’ commercial success.

Keep an eye out for more exits by Abraaj in the coming months. The National reports that the $9 billion private equity firm anticipates exiting between 12 and 20 investments in its fund portfolios annually, with 50% of them being in the Middle East and Africa. It plans to make similar numbers of acquisitions in the same time frame.

You may have heard of Investec’s plan to reduce its exposure to the private equity asset class by unbundling Investec Principal Investments from the investment bank and establishing Investec Equity Partners. Business Day provides us with more information about the plan in an article last week. Apparently, the plan would still leave the investment bank managing R3.7 billion (approximately $257 million) in direct investments, while the balance of the assets, worth some R3.7 billion (approximately $520 million) would be transferred to the new entity.

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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