Last week in brief…January 4th, 2022
Exits, exits, exits. If there’s been a theme in Africa’s private equity deal world over the past few weeks, it’s the number of realizations funds and fund managers have been pulling off. We’re sure there are multiple criteria motivating the disposals, but the need to adjust portfolios given the impact of the pandemic must surely rank among the highest.
Trade Sales certainly featured. The biggest exit of the past few weeks was Equinix‘s acquisition of data center and connectivity solutions provider MainOne from a group of investors including Harith, Africa Finance Corporation, FBN Capital, and African Development Bank in an all-cash transaction. The deal values MainOne at $320 million.
Afribon, a food flavoring business backed with $2 million by impact investor Investisseurs & Partenaires in 2018, has been acquired by The Kerry Group. The deal expands the Irish flavor group’s footprint in Africa and opens up global markets for Afribon’s products.
Ethos Private Equity has agreed to sell paper and packaging supplier Neopak Holdings to The Corruseal Group, a privately-owned business in South Africa. The private equity group originally paid $44 million for the business in 2014, and ought to have made a healthy return given that some estimated that Ethos had paid 20% less than the net asset value of the unit when it bought it and its annual revenues topped $68 million recently.
Two private equity firms took the IPO route for their exits. Mediterrania Capital Partners has sold a part of their stake in construction business Travaux Généraux de Construction de Casablanca when it was listed on the Casablanca Stock Exchange. While details of the size of the stake sold, the amount of money and the level of returns earned for the fund have not been disclosed, the IPO provided investors with a cash-out of 300 million Dirhams (approximately $32.3 million) as well as a capital increase of the same amount. TGCC will use that capital to support its domestic and overseas expansion plans.
Amethis has sold its entire minority stake in Velogic as part of an IPO on the Stock Exchange of Mauritius. According to reports, the listing of Velogic earned Amethis Fund I an estimated $18 million for the 33.77% stake, although the IRR delivered to the fund and its investors has not been disclosed. Velogic’s Kenyan and Indian operations are delivering double-digit growth rates. Over the course of Amethis’s holding period, the company’s revenues have grown to over €75 million annually and doubled its EBITDA.
In a secondary sale, CDG Invest has completed the sale of its minority stake in Techniques Science-Santé (T2S) to a Helios Investment-owned MedTech platform. the details of the final sale price have not been made available, although a representative confirmed to Africa Capital Digest that the exit has earned CDG’s fund Capmezzanine II an IRR “north of 30% over 5 years.”
Alitheia IDF‘s Gender Smart Fund has reached its final close, successfully hitting its target and becoming the largest gender-lens private equity fund in Africa. The European Investment Bank committed $24.6 million in the fund, lifting the total amount of investable capital to $100 million and helping the fund reach its final goal. Sponsored by two women-owned, women-led private equity firms, the Gender Smart Fund’s strategy is to invest in female owners and operators of SMEs as well as similarly-sized firms providing women-focused products and services. Typical deal sizes will be between $2 million and $5 million, with businesses operating in high-growth sectors such as agriculture, agro-processing, and manufacturing in Southern and West Africa being favored.
XSML Capital also wrapped up fundraising for African Rivers Fund III, beating its original goal with commitments from a group of investors made up largely of DFIs. At $81 million, the fund is XSML’s largest investment vehicle to date, has raised a total of $81 million, half of which has already been deployed. ARF III targets equity and quasi-equity opportunities in well-run SMEs in Central Africa.
In terms of investments, the most high profile must be Accel-KKR‘s deal for Entersekt, a Cape Town-based device identity and authentication solutions provider. The amount being invested by the USA-based private equity firm is said to be significant, although precise details have not been made available. The business has earmarked the new capital to recruit high-caliber talent and push its growth into new markets.
Having backed AMC Trade Finance with $6.5 million in late 2020, Zebu Investments has agreed to buy out the remainder of the business from Africa Merchant Capital via the private equity firm’s African Food Security Fund. The amount being paid fr the business has not been disclosed.
That’s it for this week. As always, you can review these and other stories by clicking through to this week’s preview edition of the newsletter.