African private equity deal-making soars: $1.8bn transactions by May

Private equity funds focusing on Africa are becoming more active and making more deals. At least 12 deals were closed in the first five months to May 2011, compared to 19 deals in the whole of 2010, reports leading website Private Equity Africa which cites data from the research house Preqin.
The disclosed total value of the investments was $1.8 billion, compared to $600 million of deals made in the whole of 2010. Private Equity Africa reports that at least 5 more investments are set to be closed by June this year, according to its sources.
The peak was in 2007, when investors closed $7 billion across 34 deals, according to Preqin data. Current levels of aggregate deal making values are similar to those seen in 2008. Then came the global financial crisis and both deals values and volumes have slumped. 2010 saw the lowest number of deals since 2006.
Prominent among this year’s deals, according to the report, is Nigeria’s ACA Capital which invested into a $750 mn transaction in Union Bank, while New York headquartered Vine Capital Partners led a consortium of investors to recapitalize Afribank, based in Lagos.
Egypt’s Citadel Capital backed a $39.5million turnaround investment in Tenth of Ramadan for Pharmaceuticals and Diagnosing Products (Rameda). The deal was structured through its subsidiary Sphinx Private Equity Management.
Financial technology investments were to the fore. Horizon Equity Partners exited its financial technology portfolio company, Peresys, in South Africa through a $56.4million trade sale to Australia’s IRESS, generating 14 times returns on cost. Adlevo Capital’s specialist technology fund made its first transaction, partnering with Helios to back a $110 mn InterSwitch deal. In the same sector, Sarona injected $300,00 in Mobile Transactions Zambia, described on Grassroots’ Business Fund website as “the fastest growing company in Zambia and one of the fastest in Africa”.
A partner at an Africa-focused private equity investment company in London told Private Equity Africa: “We have been very busy this year. We have already done more deals in 2011 than we did in the whole of last year.”

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