New private equity fund commitments to boost growth of African companies

The recently-announced Nordic Horn of Africa Opportunities Fund will invest in SMEs in Somalia.

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African companies will benefit from several new private equity fund commitments and investment partnerships announced during June 2018, according to Africa Private Equity News, an industry information service. These funds focus on a variety of sectors – including agriculture, renewable energy and technology – and will help businesses on the continent accelerate their growth.

South African private equity firm Agile Capital has launched a third fund of R1 billion (about $75 million) and is aggressively targeting fresh investments. While Agile’s existing portfolio is concentrated on the services, manufacturing, automotive and infrastructure sectors, the firm’s criteria for investment doesn’t exclude other industries. “We favour acquiring a controlling stake in any sustainable company poised for growth,” says CEO Tshego Sefolo.

Specialist forestry investor Criterion Africa Partners has announced the first close of its Africa Sustainable Forestry Fund II, with several institutional investors – including the UK’s CDC Group, Dutch development bank FMO and the European Investment Bank – making commitments of $81 million. The fund has a total target of $150 million, and invests across the forestry value chain.

Renewable energy continues to be a popular theme for investors, and Climate Fund Managers was therefore able to attract additional capital of $75 million to its blended finance facility, Climate Investor One (CIO), bringing the total third-close fund size to $535 million. The CIO, launched in partnership between FMO and South Africa’s Sanlam Infraworks, provides funding for renewable energy projects in the wind, solar and run-of-river hydro sectors in developing countries across Africa, Asia and Latin America. The three new investors are IMAS Foundation (a sister foundation to the INGKA Foundation – the owner of INGKA Group, which in turn owns the majority of IKEA’s department stores globally); Swedfund, the development finance institution of Sweden; and the Nordic Development Fund.

Gulf Capital, the Abu Dhabi-based alternative asset manager, revealed that Egypt is one of its target geographies for over $350 million it plans to invest in private equity over the next two years. “We are encouraged by what’s happening in Egypt. Egypt is growing above 5%, they devalued the currency, restructured the economy, introduced new investment laws, and foreign reserves are [at an] all-time high. If you look at the IPO market, it is 10 to 15 times oversubscribed,” the firm’s CEO Karim El Solh, told Gulf News.

The month also saw some commitments to funds which invest in small and medium enterprises (SMEs) and startups. For instance, Norfund, together with Shuraako (a programme of One Earth Future) and the Danish development finance institution IFU, established the $10 million Nordic Horn of Africa Opportunities Fund for supporting SMEs in Somalia. “We believe the fund will have significant development impact in Somalia and also achieve a small yet positive and financially sustainable financial return,” commented Kjell Roland, outgoing Norfund CEO.

In addition, the African Development Bank (AfDB) has approved a $15 million equity investment in the Africa Food Security Fund (AFSF) to support SMEs operating in food and agriculture value chains across sub-Saharan Africa. AFSF is a second-generation fund, managed by Zebu Investment Partners, targeting a total capitalisation of $100 million.

In the technology sector, South African investment firm Crossfin concluded a deal with Investec to identify early-stage fintech startups through Crossfin’s angel funding arm Blue Garnet Investments. Furthermore, Orange Digital Ventures (ODV), the corporate venture fund of mobile telecommunications giant Orange, has partnered with Google to explore opportunities for co-investments in Africa, the Middle East and Europe. The ODV team and Google will jointly evaluate promising investment opportunities with startups in the fields of new connectivities, IoT, cybersecurity, cloud, AI, fintech, as well as new business models in Africa and the Middle East.