16 Jul

New private equity fund commitments to boost growth of African companies

African companies will benefit from several new private equity fund commitments and investment partnerships announced during June 2018, according to Africa Private Equity News, an industry information service. These funds focus on a variety of sectors – including agriculture, renewable energy and technology – and will help businesses on the continent accelerate their growth.

South African private equity firm Agile Capital has launched a third fund of R1 billion (about $75 million) and is aggressively targeting fresh investments. While Agile’s existing portfolio is concentrated on the services, manufacturing, automotive and infrastructure sectors, the firm’s criteria for investment doesn’t exclude other industries. “We favour acquiring a controlling stake in any sustainable company poised for growth,” says CEO Tshego Sefolo.

Specialist forestry investor Criterion Africa Partners has announced the first close of its Africa Sustainable Forestry Fund II, with several institutional investors – including the UK’s CDC Group, Dutch development bank FMO and the European Investment Bank – making commitments of $81 million. The fund has a total target of $150 million, and invests across the forestry value chain.

Renewable energy continues to be a popular theme for investors, and Climate Fund Managers was therefore able to attract additional capital of $75 million to its blended finance facility, Climate Investor One (CIO), bringing the total third-close fund size to $535 million. The CIO, launched in partnership between FMO and South Africa’s Sanlam Infraworks, provides funding for renewable energy projects in the wind, solar and run-of-river hydro sectors in developing countries across Africa, Asia and Latin America. The three new investors are IMAS Foundation (a sister foundation to the INGKA Foundation – the owner of INGKA Group, which in turn owns the majority of IKEA’s department stores globally); Swedfund, the development finance institution of Sweden; and the Nordic Development Fund.

Gulf Capital, the Abu Dhabi-based alternative asset manager, revealed that Egypt is one of its target geographies for over $350 million it plans to invest in private equity over the next two years. “We are encouraged by what’s happening in Egypt. Egypt is growing above 5%, they devalued the currency, restructured the economy, introduced new investment laws, and foreign reserves are [at an] all-time high. If you look at the IPO market, it is 10 to 15 times oversubscribed,” the firm’s CEO Karim El Solh, told Gulf News.

Read more here: How We Made It in Africa

 

14 Jun

Barclays Africa to join the Nigerian Stock Exchange as a broker

Barclays Africa plans to join the Nigerian Stock Exchange as a broker in July and is exploring opportunities in three other African countries, in a move to create access for foreign investors looking to tap into markets on the continent.

Garth Klintworth, head of markets for Barclays Africa Group, on Thursday said its subsidiary Absa Nigeria had acquired a securities licence in Nigeria, part of a wider plan to increase it presence in west Africa’s biggest economy.

Nigeria’s stock exchange, the third largest in Africa, has in the last few years said it was reviewing applications from leading global investment banks to join its trading floor to increase foreign investment in one of the world’s least tapped emerging markets.

Read more: Reuters

23 May

Zimbabwe launches a second state-owned airline

The first one is so indebted its planes are impounded when they land abroad. Will the second be any better?

HAVING one loss-making state-owned airline is bad enough. What, then, of a government that wants two?

Earlier this year Zimbabweans were startled to learn that the government had concluded a secret $70m deal to buy four second-hand Boeing jets from Malaysia to form the core of a new national airline, Zimbabwe Airways. This venture is supposed to compete with Air Zimbabwe, the flag carrier, which ran up huge debts thanks to poor management and ex-President Robert Mugabe’s habit of commandeering its planes so his wife could shop abroad.

The government hopes to stimulate tourism and business by reopening long-haul routes that are closed to Air Zimbabwe, whose planes can be impounded as soon as they land on foreign runways. It suspended flights to London’s Gatwick airport in 2011, for instance, after one of its planes was seized over an unpaid debt. It has since been banned from European skies because of concerns over the safety of its creaking planes.

Critics questioned the secrecy and the price paid for the new planes. The government had claimed for months that the new airline was a private initiative, funded by Zimbabwean investors living abroad. Joram Gumbo, the transport minister, told local newspapers it had been necessary to lie because “if they had been exposed as government of Zimbabwe planes, they would have been taken by the creditors who were claiming for money.” He also revealed that “the man in charge of Zimbabwe Airways” is Mr Mugabe’s son-in-law.

Officials see the new airline as a panacea for the economy. That seems unlikely. It will be pitted against rivals offering reliable connecting services via their hubs in South Africa, Kenya, Ethiopia and the United Arab Emirates. Airlines based in those countries have the upper hand on numerous fronts, among them economies of scale, network synergies and more frequent flights. Zimbabwe Airways will have only one advantage: the ability to fly between Harare, the capital, and destinations in Europe and Asia without boring stopovers. Yet there is probably not nearly enough direct traffic to fill its planes.

Read more at: The Economist

22 May

Africa’s fintech industry has scored another big-ticket investment win

The streak of big-ticket investment in African fintech companies shows no signs of stopping.

Cellulant, the digital payments solutions company operating in 11 African countries has raised $47.5 million in its Series C round—one of the largest for a solely Africa-focused venture-funded company. The round was led by The Rise Fund, an impact investment fund run by TPG Growth, the US-based private equity group, with participation from Endeavor Catalyst, Satya Capital, Velocity Capital & Progression Africa.

First founded in Nigeria and Kenya in 2004, Cellulant has since expanded to nine other African countries and around 12% of Africa’s mobile consumers can make payments using its solutions. Its reach is down to partnerships with over 90 banks and several mobile payments platforms across the continent. The company says it will be expanding to two more countries following the investment.

The deal marks Rise Fund’s first investment in Africa since raising $2 billion last October. The fund’s backers include Andra AP-fonden, the Swedish pension fund and the Washington State Investment Board. It also lists music star Bono and billionaire Richard Branson on its board.

The investment in Cellulant is the latest endorsement of the key role African fintech companies are playing in bridging the crucial payments and financial inclusion gaps on the continent. Over the past three years, the sector has garnered momentum and has become the most attractive for investors on the continent.

Almost a third of funding raised by African startups in 2017 was in the fintech sector as investors bet on consumers turning to more formal financial services in a region where just 17% of the population have banking accounts. Venture funding for African startups jumped by 51% to $195 million in 2017.

Fintech was the biggest attraction for investors with 45 startups raising one-third of total funding. The success of mobile money technology like M-Pesa in Kenya and across East Africa has long shown the potential for other underserved markets. M-Pesa’s success is likely also behind for the increasing presence of mobile networks in the African financial sector and the convergence of the two sectors.

Read the full story at Quartz Africa

21 May

African fintech and agribusiness companies attract interest from investors

African private equity and venture capital deal-making in April were dominated by investments in technology companies, particularly fintech and business-to-business platforms, together with encouraging activity in the agribusiness & food sector. This according to data provided by Africa Private Equity News, an industry information service.

Fintech investments were mostly in mobile-enabled banking and financial services companies. These include: French development-finance institution Proparco’s US$3m backing of JUMO, which helps customers to access loans and savings products in East and West Africa; and a $70m round, led by US-based Trinity Ventures, into credit provider Branch International. Digital payments network MFS Africa also raised $4.5m in funding, led by LUN Partners Group, thereby becoming one of the first fintech players on the continent to receive funding from a China-based venture capital firm.

Business-to-business solutions remains an attractive theme, with TLcom Capital announcing two investments in the space – a $5m injection in Nigeria-based mobile marketing company Terragon, and a $3.5m series-A round for Kenyan consumer-feedback platform mSurvey, which plans to use the capital to scale and expand into more countries. Asoko Insight, a provider of data on African companies, attracted $3.6m in additional funding from its early shareholders and some new ones, while South Africa-based Giraffe – which enables businesses to recruit high volumes of medium-skilled staff – closed a second round of investment, supported by FirstRand’s Vumela Fund, with participation from Omidyar Network, the Brozin family’s Forever Young Capital and Catapult Trust.

The continent’s rapidly-growing food market could be worth more than $1tn annually by 2030 as imports are substituted with high-value locally-produced food, according to the Alliance for a Green Revolution in Africa. With 60% of the world’s unused arable land, Africa’s potential in the broader agribusiness sector is also enormous.

The sector continues to attract interest from private equity firms such as DOB Equity, which last month backed Rwanda-based grain trader Sarura Commodities. Furthermore, Agri-Vie and Norfund announced a $7m co-investment in Marginpar Flower Group Holdings, which has floriculture interests in Kenya and Ethiopia. In addition, South African-based The Beverage Company, in which Ethos Private Equity and Nedbank Private Equity owns a stake, signed an agreement to acquire 100% of SoftBev, the sole licensed bottler for Pepsi and its related brands in South Africa, from Bowler Metcalf and the original founders.

Read the full story at How We Made It in Africa

17 Apr

Zimbabwe Working on Logistics for Diaspora Vote, Moyo Says

Sibusiso Moyo, Zimbabwe’s foreign affairs minister, said the country is working on the logistics of allowing citizens who live outside the country to vote in general and presidential elections scheduled for this year.

The “constitution allows them to vote,” the former general said in an interview on Monday with Bloomberg Television in New York.

The refusal of the Zimbabwean government under the leadership of former President Robert Mugabe to allow members of the diaspora to vote has been the cause of disputes with the opposition over the last two decades as the country’s economic collapse led a quarter of its population to emigrate. Elections were marred by violence and irregularities.

While Zimbabwe’s ruling Zimbabwe African National Union – Patriotic Front has strong support in rural areas, the opposition Movement for Democratic Change is popular in cities and with citizens who have left the country for economic reasons. The economy has halved in size since 2000.

”It’s likely an electoral public relations designed to quieten increasingly vocal debate surrounding the Diaspora vote, but it’s practically impossible at the moment as the Zimbabwe Electoral Commission hasn’t the technical resources or capacity,” said Rashweat Mukundu, an analyst at the Zimbabwe Democracy Institute.

“They’re struggling to manage their resources within the country right now and there’s simply no way they can handle the diaspora vote.”

Moyo also said members of Mugabe’s cabinet who fled the country when the military took control temporarily in November are welcome to return but must account for any crimes. The minister was the military official who announced the takeover in a televised address.

Source: https://www.bloomberg.com/news/articles/2018-04-16/zimbabwe-working-on-logistics-for-diaspora-to-vote-moyo-says

06 Apr

The resurgence of Sudan: From zero to…

Sudan has for long been the skunk in Africa. The International Criminal Court issued two arrest warrants against its president, Omar Al-Bashir: five counts of crimes against humanity, two counts of war crimes and three counts of genocide. Sudan was also involved, for all practical purposes, in a civil war in Darfur. In 2011, South Sudan voted to secede from Sudan. This was an economic disaster for Sudan as the rich oil fields were in South Sudan. The country has long been struggling, given amongst others, the economic sanctions the USA imposed against it.

According to Trading Economics, Sudan has the sixth-largest GDP in Africa, in spite of US and EU sanctions and embargoes. It has a population of approximately 40 million people. While it has a somewhat subdued GDP growth rate of only 3.5% (relative to some of its neighbours), what is worrying is its inflation rate of 52.4%. It also has an unemployment rate of 13.3%. Its balance of trade is close to negative US$1bn in January 2018.

This article addresses the very recent past of the developments regarding a perceived renewal of interest in Sudan as an investment destination. It will be addressed against the backdrop of the interest shown by China and the USA.

Sudan and the USA
The United States recently lifted a number of sanctions on Sudan, motivated by the perception that Sudan had begun addressing concerns about terrorism and human rights abuses against civilians in its Darfur region. The lifting of sanctions rescinds measures imposed in 1997 related to terrorism concerns and other steps put in place in 2006 in connection with the conflict in Darfur. The sanctions were temporarily eased in January just before President Barack Obama left office, with his administration citing the same progress the Trump administration noted. In July 2017, President Trump extended the review for three months, angering the Sudanese, who stopped some lower-level meetings with USA officials in retaliation, but maintained contacts between senior officials (Morello, 2017).

Lifting the sanctions and ending an economic embargo came after the Trump administration removed Sudan from the list of countries whose citizens are subject to travel restrictions. Other sanctions, however, are still in place for the time being, including those against individuals with arrest warrants related to atrocities committed during the conflict in Darfur. Sudan is also still on the list of state sponsors of terrorism (Morello, 2017).

Read more at How We Made It in Africa

05 Apr

Africa Signs Free-Trade Deal to Replace Existing Agreements

African leaders signed accords setting up a continental free-trade area that’s expected to boost commerce within the 55-member African Union and eventually supplant a patchwork of existing agreements.

More than 40 nations signed the African Continental Free Trade Area agreement, or AfCFTA, which commits governments to removing tariffs on 90 percent of goods and phasing in the rest in future. The agreements will still require ratification by the individual governments and will only come into force when ratified by at least 22 countries.

“The promise of free trade and free movement is prosperity for all Africans, because we are prioritizing the production of value-added goods and services that are Made in Africa,” Rwandan President Paul Kagame said before the leaders began signing the agreements. “The advantages we gain by creating one African market will also benefit our trading partners around the world.”

Intra-Africa trade stands at about 16 percent of the continent’s total, compared with 19 percent in Latin America and 51 percent in Asia, according to the AU. The agreement could increase this by half for Africa, the United Nations Economic Commission for Africa estimates.

Read more at Bloomberg.com

04 Apr

S.Africa mulling privatisation in Ramaphosa reform drive

South Africa will consider partially privatising struggling state-owned companies as part of wide-ranging reforms set in motion by President Cyril Ramaphosa since he came to power last month, the head of the National Treasury said on Saturday.

Dondo Mogajane said South Africa was at the end of a credit downgrade cycle after Moody’s held its investment-grade rating and raised its outlook on Friday, partly because of Ramaphosa’s plan to reform state companies.

“For me, I see it as the end,” Mogajane told Reuters in an interview.

“Moody’s are saying there are things we can do and these are the things we will be focused on,” he added, highlighting plans to stabilise debt, revamp state firms and boost growth in sectors such as agriculture and tourism.

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index, and could have triggered up to 100 billion rand ($9 billion) in asset sales by foreign investors.

Investors have cheered Ramaphosa’s arrival and his choice of respected ministers in key roles, including former finance minister Pravin Gordhan as minister of public enterprises.

Gordhan is tasked with turning around state companies that have plunged public finances into crisis in recent years, including heavily indebted power utility Eskom and South African Airways (SAA), which is on the brink of bankruptcy.

“Why not?” Mogajane said when asked if it was possible parts of government-owned companies could be sold.

“There have to be new ways of looking at these things. Are we talking privatisation? Are we talking equity partnership? Let’s give an opportunity for new ministers to unpack what it means.”

Mogajane gave as theoretical examples the sale of 49 percent of SAA and of attracting private investors by splitting up the generation, transmission and distribution sections of Eskom, one the world’s biggest power utilities.

His comments are likely to go down badly with powerful trade unions, sections of the ruling African National Congress (ANC) and the Economic Freedom Fighters, a disruptive red-beret-wearing opposition party.

Read more at Reuters.com

21 Feb

South Africa’s Inflation Rate Slows to 4.4% in January

South Africa’s inflation rate slowed in January, easing pressure on the central bank to maintain a tight monetary stance.

Inflation slowed to 4.4 percent from 4.7 percent in December, Pretoria-based Statistics South Africa said Wednesday in a report on its website.

The median of 14 economists’ estimates in a Bloomberg survey was for 4.4 percent. Prices rose 0.3 percent in the month.

Price growth has been within the Reserve Bank’s target range of between 3 percent to 6 percent for 10 months, the longest run since 2015.

The Monetary Policy Committee left its benchmark lending rate unchanged for the third straight meeting last month as the risk of a credit-ratings downgrade persists.

While the central bank has highlighted the rand as a key risk to price growth, it expects inflation to remain within the target band.

South Africa’s currency was one of the most volatile tracked by Bloomberg last year and has gained 8.6 percent against the dollar since Cyril Ramaphosa was elected to lead the ruling African National Congress in December.

Ramaphosa has since replaced Jacob Zuma as president of the country.

Core inflation, which excludes the prices of food, non-alcoholic beverages, energy and gasoline, slowed to 4.1 percent in January, from 4.2 percent.

Source: https://www.bloomberg.com/news/articles/2018-02-21/south-africa-s-inflation-rate-slows-to-4-4-in-january