Soon: New $500m Africa fund

Saturday February 16 2013

By STEVE MBOGO Special Correspondent

Investors are planning a new $500 million Africa-focused fund as interest on the continent grows owing to rising consumer power.

Last December, Amethis Finance, a Luxembourg regulated closed-end fund raised a debt of $150 million and closed equity of $140 from several investors.

An additional $40 million is expected within this first quarter from large institutional shareholders, with the fund hoping to hit the $500 million target by end of this year.

Amethis announced in a statement that of the total, $300 million will be in equity and $200 million will be debt.

The company said it received the approval from the board of Overseas Private Investment Corporation (OPIC), the US development finance institution last December for the $150 million credit facility for a maximum maturity of 13 years, which will finance its lending activity.

The fund is a big win for African entrepreneurs whose sources of funding is expanding exponentially as more foreign based investors seek higher returns on the continent.

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The fund, which will specialise in long-term investments is expected to start operations in several countries in the first quarter of this year.

The company said its main focus will be fast growing economies such as Kenya, Ghana, Ivory Coast, Nigeria, Morocco, Tunisia and Uganda.

“Amethis Finance will provide financial instruments such as long-term debt, equity investment and arrangement capacity,” said the company in a statement.

“Our strategy will be based on the countries’ growth potential driven largely by domestic consumption, public-private partnerships and market needs.”

Rising business confidence and consumer demand have lifted private equity fund executives’ appetite in African economies to an all-time high, shrugging off rising concerns over the level of political risk.

A 2012 survey by Deloitte Consulting shows that in comparison with South and West Africa, PE executives polled cited East Africa’s higher growth potential and business confidence, less exposure to global turmoil as well as the benefits of a strong regional trading bloc as key attractions.

New Africa-focused funds are targeting high-growth small and medium enterprises in consumer-driven sectors. Investors are also increasingly exploring deals in new markets in Ethiopia, South Sudan and the Democratic Republic of Congo.

Activity is expected to be mainly in infrastructure, real estate, healthcare, agribusiness and green energy.

Amethis’ shareholding structure is split between 18 private sector investors among them the Edmond de Rothschild Group, commercial banks, development finance institutions, companies and family offices from the US, Europe and the Mediterranean.

The company plans to open regional offices to strengthen its local network and enhance proximity with its clients.

“Amethis will focus on priority sectors which constitute both the biggest bottlenecks in Africa and its greatest return opportunities, and which rely on the development of its domestic consumption including financial services, energy and infrastructure as well as agribusiness,” the company said.

Among other services, the firm will offer fundraising of debt and equity from banks, family offices, development finance institutions and private equity actors.

It will also provide long-term lending with a priority on mid-sized enterprises for capital expenditure, acquisitions and project finance.
It will provide private equity financing, mainly through minority stakes with the ability to mix debt and equity.

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