ECP makes $50m exit on African rubber producer(2)

The Africa-focused firm earned a 3.4x return on its investment in rubber company Societe Internationale de Plantations d’Heveas – the latest in a series of successful exits on the continent.

Africa-focused Emerging Capital Partners has exited its investment in Societe Internationale de Plantations d’Heveas, earning a 3.4x return from the $50 million (€36 million) sale.

The sale of the 16 percent stake in the Ghana- and Cote d’Ivoire-based rubber company was made through block sales on the NYSE Euronext exchange and the sale of call options.

The Washington-DC based Emerging Capital Partners bought SIPH, a natural rubber producer and exporter, in March 2005 for $15 million through its AIG Africa Infrastructure Fund (Africa Fund I). Since 2005 ECP has helped the company to implement standard financial reporting, identify acquisition targets, and negotiate successfully with its technical operator, tire manufacturer Michelin, according to a statement. Michelin acquired a 20 percent stake in the company in exchange for the French company’s Nigerian rubber plantations. 

“Through the implementation of leading edge agricultural techniques – and by establishing the right partnerships and management team – the company’s revenue grew by 44 percent annually over our two-year holding period,” Vincent Le Guennou, executive vice president at ECP, said.

He also said the firm’s exit demonstrates the increasing attractiveness of the African agribusiness sector for private equity investment, as the continent develops comparative advantage in the production of some products.

The Africa Fund I still holds stakes in three companies in the agribusiness and related sectors: Somidiaa, a sugar cane producer, refiner and distributor in Central Africa, Agromed SA, a Tunisian dairy product processor and Charaf Corporation, a Moroccan fertilizer distributor. The fund closed on $407 million in 2000.

ECP’s most recent fund, EMP Africa Fund II, held its final close on $523 million in May 2007. Though other firms, including The Carlyle Group, have funds earmarked for North Africa and South Africa, ECP’s latest is the largest pan-African private equity fund.

To date, ECP has had 19 exits averaging 3x returns on investments across its Africa portfolio. The firm has returned over $600 million to its investors.