Weekly Wrap, December 8th, 2014; Permira, Actis, Heirs Holdings make private capital news last week

The week in brief…December 8th, 2014

Permira joins the ranks of international private equity firms dipping their toes into Africa’s private capital investment pool by making their maiden deal with the purchase of Teraco Data Environments.  The acquisition of the 6-year old datacenter services provider gives Permira access to a rapidly growing market, driven by increasing levels of fixed-line and mobile internet usage as well as significant upside from the anticipated expansion in levels of datacenter outsourcing.  The deal is expected to close during the first quarter of next year.

Opportunities in the education sector warranted a couple of stories this week.  On the deal front, Actis announced a “significant” investment in Universite Centrale Group, a private tertiary education provider in Tunisia.  This deal is the latest in a string of emerging markets education investments that Actis has made.  According to the press release on their website, the firm has invested over $400 million in a number of education firms over the last 5 years.  Some of the reasons why the sector looks set to hold its appeal for investors are laid out in an article that appeared in the Financial Times last week.  Focusing on private equity’s interest in education deals in Kenya, the article outlines the yawning gap between the availability of education and the demand for it created by a rapidly expanding and aspirational middle class.  As populations expand and education policy changes create more high school graduates, the opportunities to fill the gap show no signs of diminishing.

The big credit market news of the week was around Ethiopia’s debut sovereign bond issue which priced last week.  It seems that there’s no let-up in investor demand for these higher yielding notes for the moment, since the issue was heavily oversubscribed, attracting orders over $2.6 billion for the $1 billon note.  That’s all the more remarkable given the sale prospectus rather unusually made special mention of the country’s risks of war, famine and political tensions, which on top of the more general concerns that surround the levels of debt being taken on by African countries might have given some a reason to pause before piling in.  Apparently not.

If there was a prize for Africa’s private capital man or woman of the week, we’d have to award it to Tony Elumelu this week.  In deal news, his investment firm Heirs Holdings made an undisclosed seed investment in a Silicon Valley-based video social networking startup, Wanderloop.  The firm provides users with the ability to create and distribute 10-15 second video clips of themselves, a sort of LinkedIn with video if you like.  It’s at a very early stage of its development, but seems to us a winning concept.  Sticking with the entrepreneurial theme, he also launched the Tony Elumelu Foundation, a $100 million initiative to help 10,000 African entrepreneurs in the next 10 years turn their ideas into sustainable businesses.  The foundation will provide financial and business-building support.  And lastly, at completely the other end of the corporate scale, Heirs Holdings and GE announced an expansion to their power sector collaboration.  They’re teaming up to develop the very significant opportunities offered by the upstream oil and gas sectors.

And finally, data and information provider Prequin is tracking 29 private equity vehicles who are currently in market raising, in aggregate, $80 billion for investments in West Africa.  If they’re successful that’ll blow Africa’s fundraising records out of the water.

You can read these and the week’s other stories by clicking through to the full issue of Africa Capital Digest.

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