Verod Capital secures two exits as fund close looms

Of the eight deals the Nigerian private equity firm has done, the DPI is 2.2x

Verod Capital, a Lagos-based private equity firm, has sold its stake in HFP Engineering, a Nigerian company based in Lagos, and has also partially exited GZ Industries, an aluminium can manufacturer, according to a statement.

Financial details of the exits were not disclosed. Verod did not respond to a request for comment at press time.

Established in 1979, HFP is a large player in the property development and construction industry in Nigeria. The company developed several landmark projects in Nigeria, including Victoria Garden City, a residential estate with an estimated population of 30,000 inhabitants. Verod Capital acquired a 33 percent stake in HFP in 2008.

Verod also acquired a 45.3 percent stake in GZI in 2009. GZI commissioned West Africa’s first aluminum beverage can factory in 2010, with a production capacity of 1.2 billion cans. GZI is also close to commissioning a second factory in Eastern Nigeria. Verod Capital supported the strategy, business development, financing and executive recruitment of the company from a greenfield proposition to one of the market leading businesses today, it said in the statement.

In 2012, Verod reduced its stake in GZI when it sold part of the business to Ashmore and Standard Chartered Private Equity, generating a return of more than 18x. So far, Verod has returned $84 million to their LPs from the investment in GZI, according to a source familiar with the matter. It is understood Verod’s equity in GZI is worth approximately $200 million, after it initially invested $12 million of equity. Following this partial exit, Verod retains an ownership position of 22.7 percent in GZI.

The divestments come as Verod Capital is close to wrapping up fundraising for its latest fund, Verod Capital Growth Fund II, which is targeting $100 million. The vehicle is on track to close above target at the end of Q2, the source added. Verod held a $55 million first close last November, Private Equity International revealed at the time.

Since inception, Verod has invested approximately $75 million in 11 deals to date. The first eight deals were done on a deal-by-deal basis. Of those eight transactions, Verod has exited three in full and has completed one partial realisation. The distributions to paid-in ratio (DPI) on these eight deals is understood to be 2.2x.

The firm has already made three investments from its new fund. This includes an investment in Niyya Food and Drinks, a producer of fresh fruit juice and dairy products with more than 3,000 hectares of farm land across Nigeria.

Verod typically makes growth capital investments of between $5 million and $10 million, focusing on the consumer products, services, manufacturing, agribusiness, financial services, energy, and media and technology sectors, according to its website.