Singer and campaigner Bob Geldof, famous for his music as well as his campaigns for aid for Africa, is seeking to raise $1billion from institutional investors for a private equity fund to be called 8 Miles – the distance from southern Europe to the northern tip of Africa.
Newspaper coverage of the initiative last week, including in UK’s Financial Times (www.ft.com), ranged the fund’s eventual planned size from $750 million – $1 billion. It will be one of the biggest private equity initiatives into Africa. The fund’s first close is expected early in the fourth quarter 2010, when it will have raised more than $150 million in committed capital, according to a source.
In June, the African Development Bank (www.afdb.org) announced it would make a $50m investment in the fund, which is said was aiming for $750 million and would aim “to invest equity and quasi- equity in greenfield and brownfield projects in Africa”. The International Finance Corporation (www.ifc.org), the World Bank’s private sector arm, is considering up to $60 million, while Geldof also committed an undisclosed amount of his own money.
The fund is to be run by Mark Florman, who is a co-sponsor and seasoned in private equity. According to www.infrastructureinvestor.com, he is currently a senior advisor and non-executive chairman with London-based financial advisory firm Spayne Lindsay & Co. the fundand had 7 years as a senior principal for London-based private equity firm Doughty Hanson. However, he is also linked to philanthropy and co-founded the Centre for Social Justice in 2004 – a UK think tank aimed at reducing poverty – and founded Build a School in Africa in 2002. Another name reported linked with the management is Gordon Moore of Cinven.
The fund aims for some 20 investments of between $15m and $80m in agribusinesses, financial services and telecommunications. The AfDB said in a press release: “A majority of the Fund’s investments will be in existing companies who need capital for expansion plans. The Fund’s portfolio will include businesses in sectors that will grow from the expansion of Africa’s economy and resource industries including: agribusiness, financial services, consumer goods and infrastructure. The Fund will contribute to job creation, income generation, poverty reduction and food security.”
Mr Geldof hoped to launch 2 years ago but the global financial crisis delayed the plans. The fund has not yet held its first close.
Geldof first got involved in charity work in 1981 while a singer with the Boomtown Rats band, and in 1984 organized the Live Aid concerts for famine relief for Ethiopia. He has since been an outspoken campaigner for aid and for debt relief for Africa and been involved in many political initiatives, including working with another musician, Bono of bank U2, who has also become an investor through his media firm, Elevation Partners. Geldof has been a businessperson for some years, running TV production companies such as Ten Alps (“planet” spelled backwards) among others
He has top-level access to major policymakers and others, and has apparently talked to Sudan’s Mo Ibrahim, a telecoms tycoon who is a noted philanthropist and also has an equity fund; Arki Busson, the founder of hedge fund EIM; and Tony Blair, former British prime minister who has joined Geldof in many campaigning initiatives for increased aid to Africa.
Geldof outlined the philosophy behind the fund at a 2009 event organized by the CDC Group: “Poverty can be alleviated through aid, but will only be eliminated through trade, investment and growth. And it is trade and investment that will support the dynamism and enterprise of people in Sub-Saharan Africa and South Asia and give them the jobs, dignity and opportunity that they deserve.”