Kingdom Zephyr Africa Management is a joint venture between the US-based private equity firm Zephyr Management and a Saudi prince. The firm started to deploy its second pan-African fund, which is still heading towards a target of up to $500 million, by inking three investments in less than two weeks – one of which was its largest ever.
The first two investments from Pan African Investment Partners II were finalised simultaneously at the beginning of March: minority stakes in Mixta Africa, a Spanish affordable housing developer operating predominantly in the African low- to middle-income residential real estate sector, and Thunnus Overseas Group, a producer and distributer of canned tuna with operations in Cote d'Ivoire, Madagascar and France.
At €45 million, the Mixta Africa deal is Kingdom Zephyr's largest single investment since it was formed in 2004 and secured the firm a 21.2 percent stake.
Kingdom Zephyr invested €14.3 million in Thunnus Overseas Group for an undisclosed stake alongside New York-based Africa-focused co-investor Emerging Capital Partners.
A week later, Kingdom Zephyr revealed a $20 million investment in Johannesburg-based Buildworks for a 30 percent stake. Buildworks, which has historically supplied heavy building materials to the construction industry, used the bulk of the Kingdom Zephyr investment as acquisition capital to buy Consolidated Power Projects – or “Conco” – which builds electrical sub-stations for the power industry.
Through the Conco bolt-on, Kingdom Zephyr and Buildworks have gained exposure to the ongoing development of Africa's electrical power infrastructure. “The mutual goal is to expand Buildworks' business lines within the power sector and enhance its footprint on the African continent,” says Kingdom Zephyr partner Panos Voutyritsas. “We see growth in African electrical infrastructure for the next 10 to 20 years.”
In the space of one month and three deals, the fund has built a diversity of exposure that includes food, low-cost housing, construction, energy and infrastructure. As well as demonstrating diversification, the three investments suggest that amid arid credit market conditions, growth investors taking minority stakes are a welcome source of capital.