Private equity real estate firms Colony Capital and Sam Zell-owned Equity International have thrust Libya into the private equity limelight.
Colony is in the process of negotiating the largest-ever African buyout, a €4 billion ($5.9 billion) bid for oil refining and distribution business Tamoil. The bid is being made with the backing of the Libyan government, the firm's current owner, and reportedly trumps US buyout firm The Carlyle Group's rival offer.
Equity International, chaired by Zell and led by chief executive Gary Garrabrant, is also looking to make a splash. Garrabrant has said the firm, which invests in homebuilding companies in emerging markets, is looking to benefit from Libya's plans to build 530,000 houses by 2012.
Meanwhile, the Libyan government is beginning to invest a $40 billion sovereign fund controlled by newly-founded entity the Libyan Investment Authority, according to the UK's Financial Times. The latest addition to the array of sovereign funds embarking on cross-border investment programmes is likely to raise a few eyebrows, despite the country's much-publicised rehabilitation after it restored full diplomatic relations with the US in May last year.
For all the increased interest in investment possibilities, life may not be easy for those who venture into the oil-rich state led by controversial leader Colonel Muammar Gaddafi, despite his son Seif Al-Islam's attempts to preside over a liberalisation of the economy. Colony's deal has encountered turbulence, according to news agency Bloomberg. The firm has reportedly been denied information about the target company's assets, liabilities and taxes and is reportedly considering a withdrawal. A Colony spokesman declined to comment.
Nonetheless, Libya has North Africa's largest oil reserves and the potential rewards from investing in the economy are obvious, despite the pitfalls. In recent times, the country has rarely featured in the travel plans of the international business community due to extensive sanctions imposed by the West. But if pioneering investors return with tales of fortunes to be made, there can be little doubt that more executives will be buying tickets to Tripoli.
BRAIT PROFITS FROM BUYOUTS
South African investment firm Brait's profits have increased on the back of a 40.1 percent rise in takings at its private equity unit. Brait's operating profits were up 12 percent to $28.9 million (€19.9 million) from $25.8 million in the six months to 30 September, in comparison with the same period last year, according to the firm's interim results. Private equity profits were up to $20.3 million from $14.4 million. The rest of the breakdown was $2.3 million from corporate finance, $2 million from specialised funds and $4.3 million from miscellaneous group investments.
AFRICAP MICROFINANCE RAISES $50M
African microfinance investor AfriCap Microfinance has more than tripled its capital under management from $14 million (€9.6 million) to $50 million through a capital increase. Microfinance provides loans of around $300 to $500 to entrepreneurs in poorer countries. The fund has a mandate to invest across all of Africa and has made 12 investments in various countries including Nigeria, Burkina Faso, Senegal, Ghana and Kenya. Existing shareholders such as Canadian charity Calmeadow and the European Investment Bank have reinvested to take 35 percent of the fund. Development agencies FinFund, NorFund and SwedFund as well as private investors Nordic MicroCap, Blue Orchard Private Equity and the Gray Ghost Fund made their first commitments.
CDC COMMITS $20M TO SOUTH AFRICAN FUNDS
Emerging markets fund of funds CDC has committed $20 million (€13.6 million) to two South African mid-market growth capital funds taking its commitments in the country to $130 million. The firm has committed $10 million both to Medu Capital's second fund which is targeting R600 million (€63.1 million; $92.7 million) and to Horizon Equity's third fund which is raising R500 million. Medu has raised R430 million so far and is targeting a final close at the latest in May 2008. It is backed by South African investment firm Brait which has a 49 percent stake in the firm's holding company. Brait is also an investor in Medu's funds. Horizon held its second close recently on R465 million and is looking to complete fundraising by next March at the latest.
SUB-SAHARAN BUYOUT VOLUME UP TWO-THIRDSSub-Saharan buyout volume has increased by 64 percent in the first three quarters of 2007 to $5.3 billion, compared with $3.2 billion for whole of 2006. The number of transactions has also gone up from 9 last year to 12 so far this year, with mean deal size rising from $359 million to $442 million.
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SAUDI PRINCE'S FUND MAKES 2.4X IN THREE YEARS
The first Kingdom Zephyr fund has achieved an internal rate of return of 94 percent over three years and a return on its original investments of 2.4 times, according to a statement by Kingdom Holding. The fund is managed by Kingdom Zephyr Africa Management, which is 50 percent-owned by Kingdom Holding, which is in turn owned by Saudi prince Alwaleed Bin Talal bin Abdulaziz Alsaud. Kingdom Zephyr's second fund is currently raising $500 million, which includes a $250 million commitment from Kingdom Holding. The first fund raised $122 million in 2004 and includes in its portfolio African telecoms group Celtel, West and Central African bank Ecobank and Moroccan insurance company CNIA Assurance. The Saudi prince is the largest shareholder in Citi with a 3.6 percent stake. In November, he became the first owner of an Airbus A380.
ECP MINES DEAL IN MOROCCO
Emerging Capital Partners, the Washington DC-based offshoot of AIG Africa Infrastructure, has teamed with European private equity firm Truffle Capital in the $53 million (€36 million) buyout of Moroccan mining company Compagnie Miniere de Touissit. The company mines silver-bearing lead and silver-bearing zinc and is ECP's third such investment: it has previously invested in Anvil Mining in the Democratic Republic of Congo and in Senegal's Mineral Deposits Limited. ECP, which recently raised and has nearly fully deployed the largest ever pan-African fund, made its investment via the Moroccan Infrastructure Fund, a vehicle it established in December 2006 in conjunction with Attijari Invest, the private equity arm of Morocco's largest bank, Attijariwafa Bank. This fund currently has $98 million in commitments.