Angola’s first private equity fund targets $100m

Previously the preserve of energy specialists and pan-regional players, Angola will soon have its first domestic private equity fund founded by a local bank and a development finance institution.

Angola Capital Partners, a joint venture between Angolan commercial bank Banco Africano de Investimento (BAI) and Norwegian development institution Norfund, is raising Angola’s first ever private equity fund with a target size of $100 million.

Fundo de Investimento Privado de Angola (FIPA) will invest in small- and medium-sized local businesses in all sectors apart from oil, investing up to $10 million per deal.

Angola: first domestic fund being raised

The fund is planning a first close next month with an expected $22.5 million in commitments, according to documents from the European Investment Bank, including $15 million from Norfund and BAI.

The European Investment Bank is currently considering a €5 million initial commitment to the fund, a number which could increase to be up to 20 percent of the total fund as the fund capitalisation grows.

Angola Capital Partners points to Angola’s rapid growth rates in recent years as evidence of an economy ready for direct private equity investment. In 2007 GDP growth exceeded the 23.8 percent predicted by the IMF. However, the country’s economy is heavily reliant on its oil reserves, and falling prices  have since hit it hard, with GDP in 2009 forecast to contract by around 2.3 percent.

To date private equity coverage of Angola has been limited to pan-regional players, such as Travant Capital and Advanced Finance Investment Group, and those looking to capitalise on its vast oil reserves, such as Kosmos Energy – backed by Warburg Pincus and The Blackstone Group – and more recently Cobalt International Energy – backed by Goldman Sachs Capital Partners, KERN Partners, Riverstone Holdings and First Reserve Corporation.