Absa targets $1.7bn for second South Africa fund

The latest upper mid-market fund being raised by the South African investment bank is more than double the size of its 2005 predecessor.

Absa Capital Private Equity, the private equity unit of South African investment bank Absa Capital, is raising R14 billion ($1.7 billion; €1.2 billion) for its second fund.
 
Absa Capital Private Equity II will focus on South African upper middle market companies with enterprise values between R600 million and R5 billion, although the value of some transactions could exceed the upper limit, according to its private placement memorandum which PEO has obtained from an investor.

The fund will not invest in companies in the venture or turnaround stage or companies with significant agricultural, tobacco, weapons or mining assets.

Although similar in investment strategy, Fund II is significantly larger than Absa’s first formal private equity fund, which beginning in 2005 invested R2.1bn across five transactions. As of 30 June, that fund’s investments carried an unrealised value of R2.3bn, according to the PPM.  

Led by chief executive Andre Pieterse, Absa has emerged as one of the highest-profile private equity firms in South Africa since its formal reorganisation in 2005 and participated in three of the ten largest South African private equity transactions in 2006.
 
In December 2006, Absa spent R545.2 million for a 49 percent stake in Dow Chemical Company divestiture Safripol. And last year, Absa teamed up with US private equity giant Bain Capital to purchase South African retailer Edgars Consolidated Stores for R25 billion, the largest private equity transaction in the country’s history.

Absa could not be reached immediately for comment.