Travant Capital Partners, a West and Central African private equity firm managed by Nigerian executives, has completed the first close of its debut fund on $107 million (€69 million) within ten months of starting fundraising.
The fund was founded by Osaze Osifo, the former chief executive of Ocean and Oil Holdings, a Nigerian principal investment company, and Andrew Alli, formerly of the International Finance Corporation, a United Nations-backed investment company.
Travant has raised $77 million from regional investors and $30 million from CDC, the UK Government-owned development agency. Alli, the firm's deputy chief executive, says: “It's a fact the economies in Africa are doing well. This generates the funds local people have to invest, and people are also seeing you can make good returns putting your money in Africa. What's happening in certain other markets with the credit crunch makes the region more attractive.”
The fund is now scaling up its fundraising efforts and is looking to raise $300 million in total by the end of the year. It will widen its attempts to court an international investor base, while also hoping it will receive more backing from the region's investors.
The firm is taking a generalist approach to investment across sectors such as financial services, oil and gas, IT, and telecoms. It is investing across West and Central Africa, which it defines as countries from Mauritania to Angola. It has offices in Lagos, Nigeria and Douala, Cameroon.
The largest regionally focused private equity firms on the continent operating outside South Africa tend to be those with international founders such as Emerging Capital Partners, Actis and Abraaj Capital.
Another firm with homegrown executives currently looking to raise a fund is Venture Partners Botswana, which is aiming for a €150 million ($232 million) Southern Africa fund.
OECD REPORT COMMENDS AFRICAN PRIVATE EQUITY
A think-tank linked to the OECD Development Centre said private equity provides “a nimble and innovative vehicle for private-sector development on the continent”. It said private equity funds raised in Sub-Saharan Africa tripled in 2006 to $2.3 billion (€1.48 billion), or 7 percent of global allocations to emerging markets private equity funds, placing the region only slightly behind rival emerging markets such as Central and Eastern Europe and the Middle East and North Africa. The report said private equity's focus on the consumer-related and communications sectors arguably meant the asset class had a greater relevance for Africans' daily lives than the larger resourcesbased investments on the continent by larger non-financial sponsor investors.
ECP BUYS INTO FINANCIALS, EXITS FERTILISERS
Emerging Capital Partners, a pan-African investment group, has bought two financial services companies and made one exit. The firm exited its 38 percent stake in Charaf Corporation, a Moroccan fertiliser distribution company, for $23.2 million (€15 million). The initial investment was made in December 2003. Since then Charaf has increased its sales annually by 25 percent. ECP also invested $14.8 million in Générale Assurance Méditerranéenne, an Algerian insurance company, and $15.9 million for a majority stake in BACIM Bank, a Mauritanian banking group.
SANGUDI SWITCHES FROM WASHINGTON TO LAGOS
Genevieve Sangudi, an African-born managing director at Emerging Capital Partners, is returning to the continent from the US to head up the African growth equity investor's Lagos office. Sangudi managed fundraising activities for the firm's second Africa fund, which raised $523 million last year. Sangudi says: “It's very exhilarating to invest in Africa. Nigeria, in particular, is a very important country to our business and there's no better place for me to be. The centre of gravity for African private equity is shifting to being on the ground, which drove my decision to move.” While Sangudi has been regularly flying in and out of African countries, she has until now been based in Washington DC. “There are no shortage of deals to do in Nigeria and we have six portfolio companies here as well as a robust pipeline of transactions.”
ABRAAJ BUYS EGYPTIAN LABORATORY GROUP
Abraaj Capital, a Dubai-based buyout firm, sealed another Egyptian acquisition in May, buying Al Borg Laboratory, the listed medical testing group, for EG£778 million (€94 million; $145 million). The firm last year led a consortium to buy Egyptian Fertilizers Company for $1.41 billion (€906 million) from Citadel Capital in the largest secondary buyout in North Africa. It also doubled the value of its 25 percent investment in EFG-Hermes, an Egyptian investment bank, in a year – selling it for $1.1 billion to Dubai Financial Group, part of Dubai Holding, a MENA investment firm. Mustafa Abdel-Wadood, a managing director at Abraaj, said his firm has opened an office in Egypt this year because it is the North African region's most obvious candidate. “If anything we've made more investments in Egypt than anywhere else in the Middle East, North Africa and South Asia.”
DUBAI CAPITAL AND CITADEL IN EGYPTIAN GLASS DEAL
Dubai Capital Group has bought a 49 percent stake in Sphinx Glass, a glass factory, for AED730 million (€127.7 million; $199 million). Sphinx is a subsidiary of GlassWorks, established by Citadel Capital, an Egyptian buyout firm, in 2004 with other regional investors. The investment is to fund a “greenfield project” allowing the company to produce 220,000 tons of float glass each year. Float glass is produced by pouring molten glass on liquid tin, forming glass sheets. Sphinx's products are primarily used in the construction and automotive industries. Dubai Capital Group is a subsidiary of Dubai Holding, owned by Sheikh Mohammed bin Rashid al Maktoum, the ruler of Dubai.
ETHOS TO RAISE LARGEST AFRICAN FUND
Ethos Private Equity is preparing to go to limited partners and is considering a fundraising of around $1.5 billion (€952 million).The fund will likely top Pamodzi's $1.3 billion resourcesfocussed fund, raised last year. Garry Boyd, a partner at Ethos, said: “We're not yet in the formal fundraising process, although our current fund is in a pretty advanced stage of investment. Our last fund was $750 million and we're probably targeting double that size.” He said it was still a very early stage in the firm's plans. The mandate for the fund will be about 70 percent South Africa and 30 percent elsewhere in Africa. The firm is spreading its focus across Africa, having made its first investment outside South Africa in Oceanic Bank, a Nigerian financial institution, this year. Boyd is confident that his firm can go to investors having taken a prudent approach to investment during the buyout boom. “None of our deals have used bank debt at frothy EBITDA multiple levels ensuring there's a sensible relationship between the price that we paid and our operating performance. We've always had a fetish about consistency.”