Development Partners International (DPI) has held a first close on $250 million as it is attempts to raise $500 million for its second buyout fund, according to a source familiar with the matter.
The African-focused firm started fundraising last year and is expected to reach its target in May next year. It is understood the fund is getting some traction. “The strategy is quite good, the team is quite strong and this is reflected in the portfolio,” the source told Private Equity International.
Existing LPs have re-upped and other investors are currently performing due diligence on the fund, creating “some momentum”, according to the source.
One of the LPs investing in the fund is the US Overseas Private Investment Corporation (OPIC), which will invest up to $150 million into the fund, according to documents on its website.
The firm’s previous fund, African Development Partners I, a €270 million 2007 vintage, is understood to be fully invested after DPI’s most recent €25 million investment in Biopharm, an Algerian laboratory company.
DPI declined to comment on fundraising.
London-headquartered DPI, which was founded in 2007, invests across Africa, but typically targets investments in fast-growing post-conflict and newly liberalising African countries, according to its website.
The firm was founded by Miles Morland and Runa Alam. Prior to DPI, Morland was non-executive chairman of Blakeney Management, an investment firm that Morland set up in 1990. Before Blakeney, Morland spent 22 years in money management and investment banking in London and on Wall Street.
Alam has nearly 30 years of investment banking experience, according to DPI’s website. Prior to co-founding DPI, she was chief executive officer of KZAM, a joint venture between Zephyr Management of New York and Kingdom Holding Company.
Investors in DPI’s maiden fund include: CDC Group, International Finance Corporation (IFC), Missouri State Employees Retirement System (MOSERS), Ocean Wilsons Holdings Limited and Proparco, according to PEI’s Research and Analytics division.
People started to realise that economic growth in Africa had started to improve significantly. At the same time, growth in developed markets plummeted and this story has progressed in the last couple of years.
African-focused GPs are currently attempting to raise a combined $17.5 billion to invest in Africa, according to PEI’s Research & Analytics division – which means DPI faces stiff competition as it tries to get to its target.
In recent years, more LPs have started to look at investing in Africa. It started in 2008, Jeremy Cleaver, portfolio director at CDC, told PEI in a recent interview. “People started to realise that economic growth in Africa had started to improve significantly.” A number of democratic transitions in government also meant that Africa has become more interesting. “At the same time, growth in developed markets plummeted and this story has progressed in the last couple of years,” he said.
Earlier this year, Actis cut the target and changed the structure of its fourth fund after spending nearly two years in the market targeting a total of $3.5 billion.
And while LPs are looking at Africa, some international LPs – who accept Africa’s potential in theory – have refrained from tapping into the market due to the inherent risks . “The fragmented and relatively immature nature of the African market means GPs are less experienced and less local in some places. ESG [Environmental, Social and Governance] issues are less developed in Africa than in other regions so it’s more difficult to have an impact on fund managers, which is a concern to us,” Nils Rode, managing director, co-head of investment management at Adveq, told PEI recently.
Read more about investor’s appetite for Africa in PEI's Africa Special.