Both the Financial Services and the Agriculture sectors were very well-represented in the private equity deal and fund raising news coming out of Africa last week. In one case, the deal was something of a landmark for the fund, while in another, the deal concerned one of the continent’s highest profile financial services platform companies.
But first, the landmark deal. LeapFrog Investments announced its largest deal to date, spending $180 million for a stake in Ghanaian financial services company, the Enterprise Group. The investment is also the first to be made on behalf of LeapFrog Strategic African Investments, the emerging market private equity investor’s $350 million fund which has Prudential Financial as its primary investor.
The other notable financial services deal of the week concerns Atlas Mara, the African banking platform founded by former Barclays’ CEO Bob Diamond and entrepreneur Ashish Thakkar three years ago which now has interests in seven countries. Fairfax Africa, an investment subsidiary of Canadian life insurer Fairfax Financial, expects to invest a minimum of $130 million in the deal in exchange for a 35% stake in the company. The fresh capital will be used to support Atlas Mara’s growth plans, which include, in the short-term, a transaction to increase its holding in Union Bank of Nigeria.
Agriculture sector-related news last week revolved around fund raises. In the largest, we reported that Old Mutual announced the launch of a $300 million Africa-focused agricultural private equity fund earlier in June. The new fund is targeting a net US-dollar IRR of 15% over the course of its 10-year investment period, in which it will build a portfolio of approximately 20 assets.. Its investment model revolves around the appointment of operators to lease the farms acquired by the fund who will then improve and expand the farms and build and invest in related agribusinesses and agricultural technology.
Sahel Capital announced the final close for its debut fund, the Fund for Agricultural Finance or FAFIN, last week, landing a total of $65.9 million from several development finance institutions. The fund’s strategy is to back sustainable agribusinesses in the West African country and it has already invested in 4 companies. Total commitments to the fund could rise by another $10 million should an an offer by KfW Development Bank to increase its level of commitment to the fund be approved by its board.
In other fundraising news, TLcom Capital has held a $40 million first close for its TIDE Africa Fund, winning commitments from a combination of development finance institutions, Africa, European and American corporate investors and family offices. Two development finance institutions are responsible for 50% of the commitments made for the fund’s first close – the African Development Bank and European Investment Bank are each investing $10 million in the 10-year fund, which is aiming to provide its investors with a net IRR of 16%. TLcom anticipates hitting the fund’s target of $100 million in time for its final close in June 2018.
North of the Sahara, meanwhile, EuroMena is acquiring a minority stake in Retail Holdings in an undisclosed deal. The fresh capital is being earmarked to support the Moroccan retailer’s expansion plans. Founded in the mid-1980’s, Retail Holdings is now one of the larger retailers in Morocco, enjoying franchise relationships with a number of leading global brands. Recently, the company struck out south of the Sahara, acquiring control of Compagnie de distribution de Cote d’Ivoire or CDCI, one of the West African country’s largest food distributors.
In investment company news, Zimbabwe-focused investment and advisory company Brainworks Ltd has announced that it has applied to list on the Main Board of the Johannesburg Stock Exchange and is aiming to raise at least $25 million. In making the move, the company is aiming to have access to a deeper pool of more liquid capital to help push growth in its portfolio of financial services, real estate and hospitality assets.
In an article in the latest issue of The New Yorker, we found an interesting look at some of the American startups building solar power businesses to provide off-grid customers with electricity on the continent. Last year, the nascent industry attracted over $200 million in venture capital from Europe and the United States to back entrepreneurs who see a large market opportunity and a chance to make significant profits.
And finally, in the 2016 African Investing for Impact Barometer, the University of Cape Town’s Graduate School of Business finds that more than $350 billion in capital is currently committed to impact investing in 9 countries across the continent. Perhaps unsurprisingly, South African investments represent the lion’s share dedicated to impact investment strategies on the continent, professional fund managers investing in Kenya and Nigeria also increasingly aiming to achieve impact goals as part of their investment strategies.