London-based Actis, a private equity firm that focuses on emerging markets, knows Africa well. It has invested in a variety of sectors including minerals, telecommunications, financial services, property development and food and drink. With a new hire, the firm is now looking to do more in oil and gas, a process that started with a recent investment in Nigeria.
Meb Somani joined Actis in December last year to head the firm's efforts in the oil and gas sector in Africa and South East Asia. Based in the firm's London office, he has spend a large part of his career in the industry, having worked as a managing director at the oil and gas corporate finance boutique Harrison Lovegrove & Co.
While there, he advised on a $2.3 billion initial public offering of the China National Offshore Oil company. At the time of the IPO, Actis itself had a $25 million stake in the company.
Prior to that, Somani worked for Shell and Texaco in various commercial and operational roles in Europe, the Middle East and Central and South East Asia.
In February, Somani helped his new firm make its first oil and gas investment in Africa – a significant minority stake in Gulf of Guinea Energy Limited for $35 million (€26.9 million). Gulf of Guinea is primarily interested in onshore oil development. Though it currently operates exclusively in Nigeria, it has plans to expand into West Africa.
The reason behind Actis's interest in oil and gas is a simple one: “To make money,” Somani says. “It's a business that requires a long-term view for finding oil and bringing it in. It requires an appetite for risk.”
Actis is hungry for just that sort of risk. “We might be willing to invest where others might be reluctant,” Mobani says.
The firm has made prior investments in the oil and gas sector. In April 2005, it invested $25 million in Toronto-based Candax Energy, an oil and gas exploration and production company that focuses on North Africa.
Actis also manages Globeleq, a global power operator owned by CDC, the UK private equity fund investment group with a focus on emerging markets. Globeleq may soon undergo a change of ownership: in February, CDC appointed Lehman Brothers to advise on a potential sale of the business.
AIG LANDS $433M BRAZIL DEAL
AIG Capital Partners has bought Compania Providencia Industria e Comercio, a Brazilian producer of non-woven goods, for about $432.6 million (€333.5 million) in February. AIG's investment came from AIG Global Emerging Markets Fund II, a $259 million vehicle set up in 2005 to invest in Asia, Latin America, the Middle East and Africa. Brazilian private equity fund Governanca e Gastao, Portuguese financial group Banco Espirito Santo and a Brazilian transportation group owned by the Constantino family also took part in the deal.
Providencia's products are made of a fabric consisting of polypropylene, a lightweight plastic that resists moisture, solvents and oil. The company produces disposable goods like diapers and feminine products, as well as durable ones like auto-parts and furniture. It plans to increase its exports to the US and other Latin American countries, Fernando Borges, chief executive officer of AIG Capital Investments in Brazil, said in a statement.
CARLYLE BRINGS IN NORTH AFRICA SPECIALIST
As it makes a push to expand its operation in North Africa, The Carlyle Group has hired Hassan El-Khatib as a managing director. El-Khatib comes to the firm from EFG-Hermes Private Equity, an Egypt-based Middle Eastern investment bank. As a managing director there, he raised several investment funds targeting Egypt, Jordan and Turkey. El-Khatib will be based in Cairo and advise the firm on possible investments in Egypt, Algeria, Morocco, Libya and Tunisia. Carlyle's MENA team targets the energy, financial services, healthcare, industrial, infrastructure, technology and transportation sectors.
BAIN IN RECORD SOUTH AFRICAN BUYOUT
Bain Capital has agreed to pay a record R35 billion ($3.5 billion; €2.7 billion) for South African retail chain Edgars Consolidated Stores. The firm offered R46, a 51 percent premium on the company's share price on 16 October, the day before Edgars announced it was considering a buyout. Edgars agreed not to solicit competing offers. It also agreed to pay Bain a breakup fee of 1 percent of the transaction value should the bid fail. The company's management will remain in place.
The company said in a statement: “[Edgars] recognises that although its prospects remain positive, its future performance and corresponding growth profile are not without risk. The rationale for the offer is to provide shareholders with the opportunity to realise significant value for their investment.”
Founded in 1929, Edgars operates 10 retail chains in South Africa, Botswana, Namibia, Swaziland and Lesotho. Among its stores are homeware retailer Boardman, stationery chain Can and shoe shop Jet.
CARLYLE RAISES DEBUT FUND IN MEXICO
The Carlyle Group has raised a $134 million (€103 million) fund to be invested in Mexico. Joaquin Avila, a Carlyle managing director based in Mexico City, leads a team of five investment professionals to invest the fund. Known as Carlyle Mexico Partners, the fund was already 29 percent invested at the time of its close. Its portfolio companies are Universidad Latinoamericana, a private university that Carlyle acquired in September 2005, and Hispanic Teleservices Corporation, an outsourced contact center services provider for companies targeting the Hispanic market in the US. Carlyle acquired that company last December.
$370M BUYOUT IN THE CARIBBEAN
Emerging market-focused private equity firm Actis has backed the largest leveraged buyout in the Caribbean through one of its portfolio companies. Regal Forest, a Central American retailer of consumer electronics, appliances and furniture, has acquired the Caribbean assets of Courts, a retailer in the same industry, for approximately $370 million (€281 million). Scotia Capital and RBTT, Trinidad provided the senior debt for the transaction. Citigroup financed a junior tier of debt.
In 2000, Actis invested $12.6 million in Regal Forest in 2000 to help the owners, the Siman family of El Salvador, expand the company internationally. The company now has 210 stores in El Salvador, Guatemala, Honduras and Nicaragua, as well as an increasing presence in the Dominican Republic and the US. “This is a landmark transaction in many ways, not only because of the significant size of the deal by regional standards but also the complexity of the transaction,” said Gabriela Culla, an investment manager at Actis who oversees Regal Forest. “The deal includes operations in 12 countries and was financed in seven local currencies in order to reduce currency risk for the buyer.”
DARBY APPOINTS NEW BRAZIL MD
Darby Overseas Investments, the private equity arm of Franklin Templeton Investments that focuses one merging markets, has appointed Fernando Gentil as a managing director of its Brazilian operations. Gentil brings to the firm experience running reinsurance and financial services company Swiss Re's non-life reinsurance and structured finance operations in Latin America. The appointment comes as Darby seeks to expand its business in Brazil. In the last decade, the firm has invested about $175 million in Brazilian companies. Its most recent investment came in January, when it invested $25 million in BRA Transporteos Aereos, a Brazilian airline. The funding came from the Darby-BBVA Latin American Private Equity Fund, which closed at $175 million in May 2005.
PHOENICIA GROUP AFFILIATE LAUNCHES LIBYA FUND
Libu Capital, the private equity unit of US- and Libya-based diversified business and consultancy group Phoenicia Group Libya, has announced the formation of a private equity fund. “The planned capital for the pioneering fund, Libya's first, was initially set at $100 million, later being upped to triple that amount due to investor enthusiasm and preliminary commitments from institutional investors, with most LP's expected to come from Libya, the US, Europe and the Middle East,” Phoenicia Group said in a statement. The company has committed $20 million to the fund. The fund will invest in a range of sectors, including tourism, construction and oil services.