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WrapUp of Africa's Key Private Equity, Infrastructure and Venture Capital

Proshare

Monday, May 29, 2017   09:44 AM / Africa Capital Digest

Last week was a quiet week for private capital investment activity in Africa. And, of the deal that were done, none were on the large side. In what we estimate to the the largest deal of the week, XSML Capital announced that it is backing KARE Distribution for its first Ugandan deal. Terms of the deal were not disclosed.


The deal caps a busy period for the Dutch private equity firm, which held the final close for its second fund, the Africa Rivers Fund, in the prior week. As we reported them the fund looks to back well-managed, growing small and medium businesses in the Democratic Republic of Congo, Uganda, Congo and eventually Burundi with debt, equity or mezzanine capital in deals ranging from $100,000 to $5 million in size.


Making its first distressed private equity deal for its first fund, Africa Special Opportunities Capital or ASOC has acquired OptiCo, a pre-school private education company for an undisclosed amount. ASOC plans to recapitalize the business and execute a robust turnaround strategy to restore it to growth, which will include potential add-on acquisitions in new markets around South Africa.


In general, the firm looks to back businesses that are experiencing organizational, financial or operational challenges, deploying up to R50 million per investment and ensuring the company provides portfolio companies help to effect a turnaround or restructure and thereby have a better prospect of saving the organization and preserving jobs.


In a venture capital deal, San Francisco-based Zeno Ventures has backed Tizeti, the wireless broadband internet services provider based in Menlo Park, California and Lagos, Nigeria. The company, which counts the wifi.com.ng among its brand offerings, provides its clients broadband internet connectivity via solar powered WiFi towers in the Nigerian capital. It plans to roll out its operating model to other densely populated cities on the continent.


Fundraising activity was also relatively muted last week. Inspired Evolution's second fund could be the beneficiary of a $30 million equity commitment from the European Investment Bank. Evolution II, which is aiming to hit $250 million in time for its final close at the end of this year will make equity and equity-related investments to take significant minority or equity-control stakes in clean and sustainable development and project finance infrastructure opportunities. The fund held a first close in December last year, garnering commitments totaling $90 million from development finance institutions, specialized fund-of-funds and a family office.


Dutch development finance institution, the Dutch Good Growth Fund, announced it is considering an investment of $9 million in Zoscales Partners' first fund. The investment will be part of the fund's first close, which is expected to be between $30 million and $35 million in size.


The fund, which according to Africa Capital Digest's data is ultimately targeting $75 million at final close, will back growth capital opportunities in small and medium businesses in East Africa, primarily Ethiopia. Zoscales has a focus on four sectors--Consumer Goods, Healthcare, Materials and Energy--which it feels has the potential to deliver compounded annual growth rates in excess of 15% and will offer the most attractive exit opportunities to trade buyers as well as other private equity firms.


South African impact investment company Secha Capital has teamed up within the last month with Caleo Capital, a wealth and asset management firm, to launch Secha Capital VCC, a 12J investment vehicle to back established small and medium-sized businesses in the country's FMCG and agribusiness sectors.


The fund sees opportunity in what it terms the "missing middle"-- going concerns with revenues up to R50 million and between two and fifty employees--which are too big to be considered as start-ups but still insufficiently large to attract private capital. By leveraging a distinct sector focus and the managers' operational expertise, the portfolio companies will benefit from shared revenue and cost synergies and be able to push growth significantly.


The fund made its first investment in January this year, backing nativechild, a natural haircare product with approximately R1 million of growth capital. The firm is in at the final due diligence stage with two more investments and has a robust pipeline of SMEs that fit its investment mandate.


Finally, Waha Capital has appointed Rashid Siddiqi as a Managing Director in its private debt business. He joins the Abu Dhabi-based investment company after a nine-year career at NBK Capital Partners where he headed up the firm's private equity and mezzanine investment business across the Middle East, North Africa and Turkey.


Waha Capital launched its private debt business a year ago under the leadership of Mirza Beg to provide middle-market companies in the Middle East, Africa and Turkey with customized debt financing and direct lending products. Beg and Siddiqi will act as Co-Heads of the firm's private debt investment activities.


Deals and Deal News
 

 

XSML invests in Uganda's KARE
// africacapitaldigest.com
Fresh from holding a $50 million final close for its Africa Rivers Fund last week, 
XSML Capital has announced that the fund has made its first investment in Uganda, backing KARE Distribution in an undisclosed deal. Read more... 

ASOC backs distressed OptiCo for debut deal
// africacapitaldigest.com
Africa Special Opportunities Capital has made the first deal for its first fund, acquiring OptiCo, a distressed education company targeting operating private pre-schools and providing early childhood care in South Africa's Gauteng region. Terms of the deal were undisclosed.
Read more... 

Zeno Ventures backs Tizeti in undisclosed deal
// africacapitaldigest.com
Zeno Ventures, the San Francisco-based venture capital firm established in 2016, has backed Tizeti, the wireless broadband internet services provider based in Menlo Park, California and Lagos, Nigeria. Terms of the deal were not disclosed. 
Read more...  

Funds & Fundraising News... 

EIB considers $30mln backing of Inspired Evolution II
// africacapitaldigest.com
Inspired Evolution's second fund could be the beneficiary of a $30 million equity commitment from the European Investment Bank. Evolution II, which is aiming to hit $250 million in time for its final close at the end of this year, held a first close in December last year, garnering commitments totaling $90 million from development finance institutions, specialized fund-of-funds and a family office. 
Read more...

DGGF mulls $9mln backing for Zoscales Fund I
// africacapitaldigest.com
Dutch development finance institution, the Dutch Good Growth Fund, announced it is considering an investment of $9 million in Zoscales Partners's first fund. The investment will be part of the fund's first close, which is expected to be between $30 million and $35 million in size. 
Read more... 

Secha Capital launches 12J vehicle
// africacapitaldigest.com
South African impact investment company Secha Capital has teamed up within the last month with Caleo Capital, a wealth and asset management firm, to launch Secha Capital VCC, a 12J investment vehicle to back small and medium-sized businesses in the country's FMCG and agribusiness sectors. In addition to capital, the fund's strategy is to build value in its investee companies with significant operational support.
Read more...  

Trends & Perspectives... 

Tech incubators can help close Africa's governance gap
// forbes.com
Obinwanne Okeke, the Chairman and CEO of Invictus Group, looks at the ways Africa's Tech Incubators can help push economic growth and promote greater transparency, creating a virtuous circle to attract more investment on the continent. 
Read more... 

Fee structures need to adapt to meet shifting LP needs
// africacapitaldigest.com
A contributed article from Augentius which looks at some of the market factors driving the need for changes in fund structures as well as some of the methods being adopted to help navigate an increasingly complex fund terrain. 
Read more... 

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