Gulf Capital has teamed up with Serengeti Capital, an African-focused investment bank, to source private debt opportunities for the UAE-based firm’s second credit opportunities fund.
Gulf Credit Opportunities Fund II recently reached a first close of $175 million and investors have agreed to expand the mandate of the predecessor strategy to allow up to 30 percent of the vehicle to go into sub-Saharan African deals, said Walid Cherif, managing director and head of Gulf Credit Partners, the firm’s debt unit.
Gulf Capital raised $221 million for its debut credit fund in 2013, which focused on the Middle East, Turkey and North Africa. It is targeting $250 million for the new vehicle.
Serengeti Capital, which has offices in London and Accra, Ghana, has a record of raising debt and equity finance for local banks in West Africa and will help Gulf Capital source transactions from a range of sectors including financials, said Cherif.
Gulf Capital focuses on non-cyclical growth businesses such as healthcare and emphasises the strong demographics of its target markets.
Cherif said its African deals were likely to be lower risk than transactions in other jurisdictions as borrowers had a strong track record despite the wider risks of investing in the continent.
The first fund targeted an internal rate of return (IRR) of 15-20 percent and the addition of a sub-Saharan Africa allocation will not change that, Cherif added. He hopes to complete one African deal by the end of 2016.
Rather than acting as just an advisor, Serengeti’s partnership with Gulf is an exclusive arrangement with the investment bank sharing some of the carry from the fund to fully align interests, said Cherif.
“Together with Serengeti Capital, we can offer the most promising asset-light, mid-market growth companies flexible and bespoke financing solutions that will add substantial value to their businesses and help them capitalise on sector opportunities that Africa presents them with. Starting with countries in the West Africa region, we will then expand across the rest of the continent,” said Cherif.
Francis Kalitsi, managing partner and co-founder of Serengeti Capital, said: “We are delighted to form this strategic partnership with Gulf Capital, which will utilise our deep-trenched global and African experience and our successful advisory and investment track record on the continent.”
Gulf Credit Opportunities Fund I financed companies in the healthcare, education, power, oil and gas, risk management, facilities management and telecoms sectors, and is on target for an IRR of 15 percent.
Established in 2006, Gulf Capital manages over $3 billion of assets across private equity, real estate, private credit and principal investments strategies.