ACA holds $200m first close on West African fund

CAPE III is already larger than Lagos-based African Capital Alliance’s previous private equity vehicles, thanks in part to commitments from DFIs and Nigerian institutions. Up to 40 percent of the fund, which is targeting as much as $500m, may be invested in the energy sector.

Lagos-based private equity firm African Capital Alliance (ACA) has attracted $200 million for a first close of Capital Alliance Private Equity III (CAPE III), the firm said in a statement. The firm is targeting between $350 million and $500 million for its third fund, which will focus on investments in West Africa.

CAPE III: a strong energy bias

Among those to commit to the first close are international development finance institutions including CDC Group, the European Investment Bank, the International Finance Corporation and the Netherlands Development Finance Corporation (FMO). The fund has also attracted commitments from Nigerian institutions, such as fund manager First Trustees Nigeria and insurance groups AIICO and African Re-Insurance Corporation.

Investments from Fund III will be made in various sectors predominantly in Nigeria, with a small proportion directed to other West African nations. Up to 40 percent of the fund may be invested in the energy sector.

ACA’s first two funds raised $35 million and $100 million respectively. The latter of these closed in 2005 and has deployed most of its capital in investments such as Virgin Nigeria Airways, Nigeria’s flag carrier, and Cornerstone Insurance, a Nigerian life and general insurance company.

Along with South Africa, Nigeria is one of the more active private equity markets on the African continent. Actis, which has been active in Nigeria for years, recently appointed a West African head to be based in Lagos. In January Standard Bank Private Equity, the captive buyout arm of the eponymous banking group, established a private equity presence in the country for the first time.