Angola’s first private equity fund has raised US$28 million in capital in its first closing, in an important step forward for the country’s capital markets. The Fundo de Investimento Privado Angola (FIPA) aims to link local capital markets with international sources of finance and to small and medium-sized privately owned businesses.
The fund was initiated by Norfund, in association with local partner Banco Africano de Investimentos (BAI). According to a press release from the European Investment Bank, Kjell Roland, CEO of Norfund, emphasizes how having a local partner is key to success: “We believe this is the time for private and institutional investors to start looking beyond traditional markets… There are many good entrepreneurs in Angola. They are in need of strong financial partners that, in addition to financial capital, can provide long term partnership and support. We find similar demand across the continent and hope the story of FIPA can spark the interest of other investors in the African markets.”
The investors in FIPA are:
• The European Investment Bank (www.eib.org), the long-term lending institution of the European Union, whose shareholders are the 27 European Union member states. EIB has been active across Africa for over 40 years and its loans in Africa concentrate on fostering private sector-led initiatives, including SME and microfinance investments that promote sustainable economic growth and help to reduce poverty. The Bank also supports public sector projects that are critical for private sector development and the creation of a competitive business environment.
• Danish International Investment Funds (www.ifu.dk), founded by law in 1967. The objective of IFU is to promote economic activity in developing countries in collaboration with Danish trade and industry. IFU works to achieve it’s objective by investing in companies in such countries in collaboration with Danish strategic partners.
Banco Privado Atlântico (www.bpa.ao), aims to be a model financial company in Angola.
• Banco Africano de Investimentos (www.bancobai.ao), founded in 1996, claims to be the largest Angolan bank, with over 70 branches in Angola, BAI is also present in Portugal (BAI Europa), Cabo Verde, Sao Tomé e Príncipe and Brazil.
• Norfund (www.norfund.no). The Norwegian Investment Fund for Developing Countries was created by Parliament in 1997 and is a hybrid state-owned company established by law with limited liability, owned on behalf of the state by the Ministry of Foreign Affairs. The vision is to combat poverty through investments in profitable and sustainable businesses in developing countries and it works in accordance with the fundamental principles for Norwegian development cooperation.
Tiago Laranjeiro, Managing Director of Angola Capital Partners LLC, says he is optimistic about the prospects of investing in SMEs in Angola, one of the world’s fastest-growing economies. “We see plenty of potential within our pipeline companies and the economy in general. Sectors outside the dominant petroleum sector are in special need for growth and expansion capital” says Laranjeiro. “Our second closing, to be completed by year-end 2010, will aim to raise FIPA’s capital up to $100 million, so that we can fully capture the good investment opportunities we have at hand.”
Kim Gredsted, Head of the Johannesburg regional office for Denmark’s IFU says it is important to have a team on the ground in Angola since private equity financing has been mostly missing: “By filling in this gap, FIPA can be seen as a step in the right direction of making the financial system of Angola more complete… Our investment in FIPA has enhanced IFU’s presence in one of the more challenging but also very promising markets in Africa. We can now pursue investment opportunities with Danish strategic partners and in many cases bring FIPA as a local financial partner and thereby have a permanent team on the ground that will help manage the investment and mitigate the various risks that are associated with private equity investments in Angola.”