Phatisa Targets $300m for Food Fund II and IFC mulls $75m Oil & Gas Deal


Monday, March 20, 2017  01:45 PM / Africa Capital Digest

If it was a big number you were looking for in Africa's private equity world last week, Phatisa gave it to us. The private equity investor that terms itself a development equity fund manager launched the raise for Phatisa Food Fund 2, a successor fund to the African Agriculture Fund.

The 10-year fund has already got off to a good start, landing a commitment of $75 million from OPIC, the U.S. Government's development finance institution. The fund's strategy will be to back mid-sized FMCG and agri-business related companies it determines are well-positioned to modernize and grow the continent's domestic food production industry.

There were two other fund raising news items last week, both of them also courtesy of development finance institutions. Of the two, the Dutch Good Growth Fund was marginally larger, committing $7.5 million to a new fund being sponsored by Inside Capital Partners. The new fund is looking to raise up to $40 million by final close and will will make investments ranging from $1 million to $7 million in size across several sectors, including agribusiness, consumer goods, financial services, healthcare, manufacturing, technology and tourism.

Coming in a shade lower with a $7 million commitment is Oasis Capital, who received the backing of Proparco, the French development finance institution. Oasis Africa Fund, which held a $27 million first close last year, is looking to raise $50 million in total to invest in businesses providing essential services such as education, financial services, housing, healthcare, food services and hospitality. It's expected that the fund will make a combination of equity and debt investments, with individual transactions ranging from $500,000 up to $5 million in size.

In deal news, the biggest item concerns the sale of Universal Industries to RMB Corvest, RMB Ventures and the Mineworkers investment Company. Ethos Private Equity had originally taken the company private in 2011 in a deal that valued Universal at R1.3 billion at the time. Since then, the company has grown through a combination of acquisitions and regional expansion. In what is a full exit for Ethos Fund V, it seems likely that the transaction delivered a decent return.

In Nigeria, a group of investors are backing a greenfield hospital development in Lagos sponsored by AXA Mansard Insurance. Private equity investor African Capital Alliance and the IFC, the World Bank's development finance institution are among them.

The cost of the development is expected to reach $82 million, 50% of which will be funded in equity and 50% which will be funded in debt. African Capital Alliance is expected to provide up to 40% of the equity via its CAPE IV fund, with AXA Mansard furnishing another 20% of the equity. The IFC's Board of Directors is considering an $8.2 million equity investment in exchange for a 20% stake in the project, and will meet to make its decision on April 30th.

In another potential IFC investment, Apex International, an oil and gas exploration and development company owned by global private equity firm Warburg Pincus, looks likely to receive an equity infusion of $75 million fro the development finance institution. The capital will be used to support the Egyptian company's expansion plans which involve building an exploration and production business of scale, spending as much as $500 million on asset acquisitions and capital investments in drilling, infrastructure, production enhancement and exploration.

Back in South Africa, Kleoss Capital has acquired a controlling stake in Debt Rescue, one of the country's largest debt counselling firms. Terms of the deal were not disclosed. 

The investment will help Debt Rescue, which has already won significant recognition in South Africa, build out its platform further. Along with the fresh capital, it's expected that Kleoss's Partners will work closely with the firm's management team to grow the business and, in the words of Neil Roets, Debt Resource's CEO, "...take the business to the next level."

In a report published last week, Amadou Sy of Brookings Africa Growth Initiative reviews the current state of financing for the continent's infrastructure projects. African governments need to accelerate and intensify efforts to mobilize domestic and external financings resources to address the chronic infrastructure gap. These include the continent's pension plans, which with the right mix of governance, regulation and instruments could take on a greater role in transforming the continent's infrastructure landscape. He makes some suggestions as to how.

Also at Brookings, Tom Flahive and Abdoulaye Touré from CrossBoundary look at the opportunity for private equity investment in francophone Africa, a region whose attributes make it particularly attractive as an investment destination. In many ways, the region has been overlooked by the industry and they argue its time for a change.

Finally, in people news, The Carlyle Group has tapped seasoned capital markets investor Dele Babade to be an advisor to the investment giant's Sub-Saharan Africa Fund. His appointment, which takes place with immediate effect, will help bolster Carlyle's fund managers' efforts to source fresh deals, initiate new partnerships and boost the performance of the $698 million fund's portfolio companies.

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