Casting around for the theme for this month's column, we were, for a moment, stumped. That's because recent private capital deal activity in Africa has proved to be something of a mixed bag. No coherent trend or strategy seemed apparent, But, despite that, we did find a few interesting gems for you in the second half of September though the end of October.
Renewable energy opportunities continued to provoke a lot of investor interest. The biggest transaction took place in late September. The deal was signed during U.N. week and took place during Invest Africa's gathering that week in Manhattan. The investor was Highland Group Holdings, who agreed to invest $100 million of equity in Symbion Energy’s planned $370 million methane gas power generation project on Lake Kivu in Rwanda. While this is the first African project backed by Highland, the group's renewable energy projects elsewhere in the world include the Deutsche Bucht and Veja Mate offshore wind energy projects in Germany.
October saw an interesting trade sale in the renewable sector. Fenix International, a venture-backed renewable energy company with offices in East Africa and Silicon Valley, has been acquired by ENGIE. According to Crunchbase, Fenix has raised over $16.6 million since 2008 and counted Alphamundi, GVEP International, GDF Suez, Schneider Electric and Orange France Telecom among its backers.
As a result of this acquisition, Fenix becomes the first solar home system provider to link with a major energy firm. Fenix employs 350 people, operating predominantly in Uganda and has recently expanded into the Zambian market. Its client base already exceeds 140,000 customers, and its felt that ENGIE's involvement will accelerate he firm's roll out of its services to other African markets.
Another solar home provider, Mobisol, featured in the news in October. Zurich-based development asset manager responsAbility Investments struck what’s described as an eight-figure debt deal with Mobisol, the private equity-backed provider of off-grid solar home systems. The transaction involves the establishment of a special purpose debt vehicle which will be known by the acronym MOOVE, (Mobisol Off-Grid Financing Vehicle), with capital provided by two of responsAbility energy funds.
Mobisol will use the vehicle to support its growth in Tanzania, tapping it to provide financing for the electrification of over 15,000 households and small businesses. According to a company representative, the new structure is already exciting interest from a varied group of investors including impact investors, family offices and DFIs. At an aggregate level, some people feel confident that MOOVE could help structure a completely new asset class in the pay-as-you-go universe, attracting a new set of commercial and institutional investors who are keen to invest in simple and secure investment vehicle structures.
One private equity firm that's had a busy few weeks has been AFIG Funds. They put three transactions up on the board in the last 6 weeks. Two were financial services deals and one was in real estate, where AFIG made a follow-on investment in Primrose Properties Ghana on behalf of their first funr=d, the Atlantic Coast Regional Fund.
Accra-based Primrose Properties is a special purpose vehicle which AFIG first backed in April 2015. According to Patrice Backer, AFIG's COO, the asset's solid performance accelerated the decision to invest in a follow-on round. The fresh capital will be used to fund the development of a middle-income housing community in Sakumono, a suburb of Ghana’s capital.
Of AFIG's two financial sector deals, the first took place in late September. Again on behalf of their first fund, AFIG backed Nigeria’s FSDH Merchant Bank, a financial services company that offers the market a range of services including merchant, corporate and investment banking solutions as well as asset and pension fund management. Terms of the deal were not disclosed.
The private equity firm followed up the FSDH investment with another banking deal two weeks later. First Atlantic Bank started life as a Merchant Bank over 20 years ago, before switching its focus in 2011 and becoming a full-scale commercial bank in 2011.
Staying in the realm of financial services deals, private equity form AfricInvest agreed to invest $55 million to take a 14.3% ownership stake in Britam Holdings, a publicly-listed insurance company headquartered in Nairobi. The transaction is being structured through a special purpose vehicle set up on behalf of AfricInvest Fund III, DEG, FMO and Proparco, which will be managed by the Tunis-based private equity firm.
Of the investment fund launches announced in the last few weeks, two were particularly significant. A.P. Moller Capital, an affiliate of the Maersk shipping line family’s A.P. Moller Holding, added $100 million to its new Africa-focused infrastructure fund which held a $550 million interim close in August. The new commitment came from PFA Pension, Denmark’s largest pension fund, who join three other Danish pensions funds - PKA, PensionDanmark and Lægernes Pension – on the fund's roster of LPs.
In September, Capitalworks, one of Africa’s larger private equity firms, launched Africa Capitalworks, a planned $300 million investment company that will target mid-market opportunities in a number of sectors across sub-Saharan Africa outside South Africa. The investment vehicle will be directed by one of Capitalworks’ founders, Beth Mandel, and Nana Sao.
Other gems in the mixed bag include possibly Botswana's biggest private equity deal. Investec Asset Management and RMB Ventures completed their acquisition of Kamoso, a retailer and consumer goods business. While the financial details of the acquisition were not revealed, the stake was brought from Standard Chartered Private Equity and New York investor Development Capital Partners. They originally invested in Kamoso in 2015 in a deal reportedly valued at approximately $45 million at the time.
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Africa Capital Digest’s Editor & Publisher, Allan Cunningham, provides his monthly summary of the deals and activity that’s helping to drive fundraising across the continent.