02 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.

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 more here: How We Made It in Africa


17 Nov

African private equity managers ride out the storm

When one of the biggest names in African private equity snaps up a fast-growing chain of coffee shops, it’s a clear sign that investors are focusing more on Africa’s growing middle class and consumers, particularly after the currency chaos and commodity volatility of recent years that clobbered returns across much of the region.

The Abraaj Group, which has invested $3.2 billion in more than 80 companies in Africa over the last two decades, bought Java House in July for around $100 million from rival private equity group Emerging Capital Partners and Kevin Ashley, the Nairobi-based chain’s executive chairman. ECP received 12 non-binding bids – another sign of investor interest in this sector – for the coffee house chain, which started up in Kenya and later expanded into Uganda and Rwanda.

Some of the most successful PE-backed firms in Africa are concentrating on companies that can benefit from strong demand either in their home markets from domestic consumers or from overseas buyers attracted by a weak exchange rate.

Ethiopia’s Afriflora Sher, for example, owns the world’s biggest rose farm and exports roses and tulips to Europe. In 2014 KKR, the giant global PE manager, invested up to $200 million in the business to finance expansion. Catalyst Principal Partners, which is headquartered in Nairobi and administers a $125 million private equity fund called Catalyst Fund I, was attracted by the export strength of Chai Bora, Tanzania’s leading tea packaging firm, when it acquired 95% of the firm’s equity from TransCentury, a Kenya-based investment holding company, in 2013.

Another good example of an investment driven by the potential for exports is the $151 million acquisition of Vlisco Group, the Netherlands-based textiles manufacturer and retailer, by Actis in 2010.  Actis is one of the region’s biggest PE managers and has invested $3.5 billion in 70 companies in Africa, of which more than 50 have been exited.

Full article: African private equity managers ride out the storm