Actis exits in $3.4bn African telco sale

The emerging markets private equity investor will sell its 9.3% stake in Celtel as part of the trade sale to Kuwaiti mobile communications company MTC.

Formerly known as CDC Capital Partners, Actis is set to exit its investment in African cellular network provider Celtel in a transaction valuing the company at $3.4 billion (€2.6 billion).

Actis currently holds a 9.3 percent stake in the company, built up through an original investment in 1998 and three subsequent funding rounds. The firm invested a total of $56.5 million in total, which will provide a return in excess of 5.5x money invested upon completion.

Celtel will be acquired by Kuwait-based mobile telecommunications provider MTC, which has a market capitalisation of $7 billion. MTC is Kuwait’s second-largest listed company.

Celtel currently manages 13 mobile and one fixed line telecoms operations in 13 countries across sub-Saharan Africa. The company has grown revenues at approximately 115 percent per annum and provides coverage for over 30 percent of the African population.

Under the terms of the cash deal, MTC will acquire an 85 percent stake in Celtel from its current owners, including management and will purchase the remaining 15 percent within two years.

In an interview with PEO, London-based Actis partner Adam Quarry said: 'The fact that MTC as a Middle eastern investor is putting a significant amount of money into Africa shows that private capital can be put to work and provide excellent returns in developing markets.'

Commenting on the transaction, Actis senior managing partner Paul Fletcher said in a statement: “Private capital can play a huge part in catalysing growth in sub-Saharan Africa. The African economy has benefited from our initial funding and the investment MTC has made and will continue to make as it builds Celtel into the major fixed wireless telecom provider in sub-Saharan Africa.”

Actis has invested more than $600 million in the African private sector since 1998, $120 million of which in the telecoms sector. In January, Actis teamed up with the AIG African Infrastructure Fund (AAIF) to invest N5.7 billion ($43.2 million; €33.2 million) to acquire a majority stake in Starcomms, a leading fixed wireless operator in Nigeria.

Previously known as CDC Capital Partners, the Actis management company spun out in January 2004. Last year Actis was selected to co-manage the C$200 million (€122 million; $145 million) Canada Investment Fund for Africa (CIFA).