Trio of deals heralds promising year for Africa

Africa-focused firms are building on the promise shown by the continent’s private equity industry last year, with a trio of deals by Ethos, Duet Group and Emerging Capital Partners helping to kickstart dealmaking this month.

After a strong year from a fundraising perspective, many Africa-focused private equity groups appear to be shifting into dealmaking mode.

Ethos Private Equity, founded in 1984, signed its 101st deal in Africa this week, acquiring a 72 percent stake in South African corporate promotions company Kevro for about R 850 million ($109 million ; €83 million).

We are experiencing strong investment activity

André Roux, Ethos Private Equity

André Roux, Ethos chief executive, said: “We are experiencing strong investment activity, having concluded the IPO of Holdsport and acquisition of Universal Industries in the second half of 2011.  In addition, we anticipate making further announcements over the first half of 2012.”

Ethos peer Duet Group has also begun the year with a deal, investing alongside investment firm Vasari in Ethopia’s Dashen Brewery. Duet has invested $90 million as part of the deal, according to a source close to the firm. Duet said the Ethiopian brewery sector had grown by more than 25 percent per annum over the last five years, with further growth expected in line with the country’s predicted double-digit GDP growth.

The economic performance of Ethiopia over the last eight years has been nothing short of outstanding

Henry Gabay, Duet Group

Henry Gabay, co-founder and co-chairman of Duet, said: “The economic performance of Ethiopia over the last eight years has been nothing short of outstanding. We are very excited about consumer-driven businesses in the country. We have been very impressed by what has been achieved at Dashen.”

There has been exit activity too. Emerging Capital Partners this week fully exited its 24.9 percent stake in Ivory Coast-based land development and housing group Batim Africa.

The sale, to Moroccan insurance company Saham Group, generated a 1.5x return for ECP. The firm invested in Batim seven years ago using capital from its Central Africa Growth Sicar Fund. It provided growth and development capital to the company to help it expand into new markets including Cameroon and the Republic of Congo.

“As the population in Sub-Saharan Africa continues to grow and people migrate into the cities, Batim Africa is well placed to provide much needed housing through its construction projects across the Ivory Coast, Mali, Angola, and most recently, Cameroon and the Republic of Congo,” Ferdinand Ngon, managing director at ECP’s Douala office said.

“It is doubly gratifying to see such an organization exit successfully following a period of political uncertainty to embark on a new period of strategic expansion under the direction of its new owners at Saham Group,” he added.