Weekly Wrap, March 23rd, 2015; PIC, Xterra, AfricInvest and more make private capital news

The week in brief…March 23rd, 2015

Once again last week was a little light on private capital deal activity in Africa.  By far the biggest private equity investment of the week was Public Investment Corporation’s announcement of their deals in Ilangethelu and Xina Solar One, two solar power developments in South Africa’s Northern Cape.  The financing is a mixture of equity and debt, with some $366 million earning PIC a 20% stake in each of the developments, and the balance of almost $50 million being provided as debt. The deal represents the largest equity investment in South Africa’s solar power infrastructure to date. Once operational, the power stations are expected to contribute 200MW to the national electricity grid.

In an exit for Mineworkers Investment Company, (MIC), South African hotel chain Sun International agreed to acquire Peermont Group in a deal worth nearly $775 million.  In April 2007, MIC led a consortium of management and community trusts in a buy-out of the Casino and Leisure group.  Sun intends to issue shares to Peermont’s existing shareholders and roll-over existing debt.  In order to finance the acquisition, Sun will hold a rights offer and take on fresh debt.

In news of another potential exit, Bloomberg reports that Actis is working with Morgan Stanley to explore a potential sale of their portfolio company Emerging Markets Payments, which could realize a $400 million sale price. Sources tell them that The Abraaj Group and Helios Investment Partners are among the possible bidders.  A formal bidding process for the firm cold kick-off before the end of this month.

Meanwhile in other private equity investment news, AfricInvest is taking a minority stake in Nigerian agricultural commodities company Elephant Group.  Terms of the deal have not been reported.  The capital will be used to help Elephant Group expand its market share and take advantage of opportunities created by the Nigerian government’s drive to improve agricultural productivity as well as boost its share in agricultural commodities trading.

On the fundraising front, Mauritius-based private equity fund manager Xterra Capital announced the launch of the Xterra Africa Property Fund, a $300 million real estate fund targeting Africa-based opportunities in Mixed Use developments as well as the Commercial, Retail and Hospitality verticals within the real estate sector.  The fund anticipates partnering with a number of Africa’s  large, reputable developers to build and secure a pipeline of prime development projects across the continent, including Cote d’Ivoire, Ghana, Kenya, Namibia, Nigeria, Rwanda and South Africa.  It plans to invest in up to 20 projects and claims to have identified a pipeline of development-ready opportunities exceeding $2.5 billion in value.

Two new tech-focused funds were announced last week.  Leap Ventures, a new, $71 million MENA-focused venture fund, has been launched by four of Lebanon’s most seasoned entrepreneurs and investors.  The fund plans to make Series B investments between $3 million to $7 million in growth-stage companies.  And Sawari Ventures announced the launch of Sawari Ventures Fund I, a new $50 million venture fund targeting growth stage tech startups in Egypt, Morocco and Tunisia. The fund is expected to close by the end of the year and to start deploying capital in early 2016.

There are a number or DFI-related transactions in the news, both actual and planned.  The European Investment Bank announced an agreement to extend a $130 million line of credit to the National Bank of Egypt to help develop the bank’s lending capacity to the country’s small and medium-sized enterprises, (SMEs).  The IFC announced a $13.5 million investment in a steel mill, MMI Integrated Steel Mills Mozambique, based in the Port of Nacala’s Special Economic Zone in northern part of the country, which will manufacture high quality galvanized, color coated roofing sheets, and is expected to create 250 jobs in the area. In a separate, potential transaction, the IFC is also considering investing $6 million in Business Partners’ new International East Africa fund.  The investment would be a straight equity investment in the fund, which is expected to have $30 million in capital and target SMEs in Kenya, Rwanda and Uganda who lack access to long-term financing.

Finally, a couple of interesting profile pieces this week. In the first, a Q&A with Kuramo Capital’s Wale Adeosun and Africa Sunrise Partners’ Melissa Cook, both member of the President’s Advisory Council on Doing Business in Africa or PAC-DBIA.  They talk about the Council’s goals and progress as well as give perspective on the risks and rewards of doing business in Africa.  In the second, a profile of financial services private equity investor LeapFrog Investments‘ approach to risk management and governance of its portfolio companies in Africa.  Both give lots of food for thought.

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

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