Weekly Wrap, January 5th 2015; Abraaj, Aavishkar, AFIG Funds and more make private capital news last week

The week in brief…January 5th, 2015

There seemed to be no let-up to The Abraaj Group’s dealmaking pace over the last two weeks.  The ongoing saga of Abraaj Investment Management’s bidding war with Kellogg for Bisco Misr seems to be over.  Their latest bid, valued at $142 million, made on December 24th was trumped once more by Kellogg the following day with an offer of almost $145 million.  Abraaj conceded and announced it will be pulling out of the bidding process, noting that the final price, some 20% higher than the original offer, was a sure sign of rising investor interest in Egypt.

In better news for Abraaj, it was announced that it has realized a full exit of its investment in Moulin d’Or, Tunisia’s leading baked goods maker.  While neither the terms of the deal nor the investment’s returns were disclosed, the company is posting double-digit growth rates by expanding regionally as well as consolidating its market share domestically since Abraaj made its first investment in 2012.

In other deal news over the last fortnight, shareholders of Nigerian-German Chemicals, the distributor of pharmaceuticals and bottled beverages, approved an investment of $14 million from AFIG Funds’ Atlantic Coast Regional Fund.  The capital will be used to upgrade and expand the company’s production capacity.

In a first on the fundraising front, Mumbai-based social entrepreneurship fund Aavishkar announced plans to raise $100 million for Africa-focused investments.  The fund will be the firm’s first Africa fund, making them the first Indian VC fund to enter Africa, according to The Economic Times of India.  Having already raised 50% of target, the fund’s CEO expects to hold the final close in March 2015.

The retreat in commodity prices offers both challenge and opportunity for investors in Africa, a recurrent theme in the Financial Times over the last two weeks.  Firstly, the slump in oil prices is contributing to a sell-off of Africa’s sovereign bonds, fresh off a banner year for issuances, with yields being pushed up and prices down.  The ability of some countries to service their debt levels has been nagging investors all year, but until recently there was no sign of weakening interest in the asset class.  Perhaps we’ve reached a tipping point as the Federal Reserve looks set to start raising rates in 2015 and the outlook for growth in the rest of the world gets murkier.

On the flip side, the decline in valuation levels for mining assets and the apparent reluctance of the sector’s chief executives to go on a buying spree has created a unique opportunity for private equity firms to do deals with strong return potential.  Crushed valuations, an abundance of assets for sale and limited competition from strategic acquirers all add up to a “perfect storm” for private equity investors, according to some.

And finally, a small selection of lists compiled by various publications relating to infrastructure and venture capital investment in Africa.  Everyone likes a list, it seems, at this time of year, so have at it, as they say.  Many thanks for reading Africa Capital Digest last year, and we look forward to your comments and thoughts as we continue providing you with information on the private capital investment markets in Africa in 2015.

You can review these and other stories by clicking through to this week’s complete issue of Africa Capital Digest.

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