PRIVATEEQUITY & FUNDRAISING Wednesday 25 April 2018
New PE opportunities emerge in health care, education … As AVCA private equity conference opens LOLADE AKINMURELE
H
igh profile keynote speakers, panellists, and investors opened the African Private Equity and Venture Capital Association’s (AVCA) 15th annual conference in top-performing North African economy, Morocco, on Monday. The conference is hosting the top 600 private equity leaders, who manage over $US1.3 trillion in assets, as they discuss the key trends shaping Africa’s investment landscape in 2018 and beyond at this year’s Marrakech gathering in Morocco. Lamia Boutaleb, Secretary of State to the Minister of Tourism, Air Transport, Crafts and the Social Economy, Kingdom of Morocco gave a keynote speech on private equity opportunities in the tourism sector, before taking part in a conversation where she heralded the progress of Morocco and underlined the positive outlook for investment in the country. Morrocco is Africa’s biggest tourism destination, with tourism receipts topping $7 billion in 2017. The industry is Morocco’s top hard-currency earner and accounts for 10 percent of its economy. The Moroccan economy grew by an estimated 4.4 percent in 2017, second only to Egypt, which grew 5 percent, according to data compiled by BusinessDay. Brahim Benjelloun-Touimi, Group Executive Managing Director, BMCE Bank of Africa also remarked that “there are opportunities to be leveraged in sectors such as education and healthcare, which previously were not in the spotlight.” A panel with Albert Alsina, Founder and CEO, Mediterrania Capital Partners and Ziad Oueslati, Managing Director and CoFounder, AfricInvest, discussed North Africa’s growing stability, with the latter highlighting that “North Africa has had some turbulent years but investor confidence has been restored and the region has become increasingly appealing.”
In an interview with Nigel Wellings, Partner, Clifford Chance and Murray Grant, Managing Director, Head of Intermediated Equity, CDC Group highlighted the company’s focus on supporting businesses that are commercially successful and have a powerful development impact through the creation of jobs. He also stressed that “job creation and sustainability must be at the heart of investing in Africa.” On a panel session focused on the power sector, Wale Shonibare, Director, Energy Financial Solutions, Policy and Regulation, African Development Bank (AfDB), commented that Africans “need to be able to trade energy across countries and prioritise on building connections and power pools.” This served as an important prelude to the upcoming AfDB’s closed door roundtable on the Facility for Energy Inclusion (FEI) programme. The FEI programme aims to finance small-scale energy projects with the objectives of aggregating capital, structuring bankable projects and accelerating delivery with a view to increase access to clean energy across Africa. A panel with Patrice Backer, Chief Investment Officer, AFIG Funds and John Opubor, Managing Partner, Coronation Capital discussed their sourcing strategy for companies with great potential, while a session with Sébastien Boyé, Chief Investment Officer, Investisseur & Partenaires focused on private equity
PE WORD OF THE WEEK Seed Investor These are institutional investors who deploy capital into very early-stage of start-up companies, they are considered a subset of venture capitalists.
in fragile and conflict-affected situations. In a keynote inter view, Boutheina Ben Yaghlane Ben Slimane, General Manager of La Caisse des Dépôts et Consignations underlined that “African pension funds are vital for supporting SMEs, which are a key driver of growth in Tunisia.” This led to a wider discussion on the importance of the pension funds in Africa, and how other deposit funds like CDC Tunisia are leveraging long-term investment opportunities for diversification and attractive returns. Michelle Kathryn Essomé, Chief Executive Officer, AVCA, said “AVCA’s landmark annual global gathering comes at a time of consistent private equity deal activity and demonstrates that there is confidence in African private equity despite challenges in previous years. We believe in the power of private capital, and we will continue to serve as the catalyst and voice for PE in Africa. Africa is the most exciting and attractive frontier and emerging market in the world.” This year’s event is sponsored by leading investors and industry players across different geographies including Adenia Partners, LEX, AFIG Funds, African Capital Alliance, African Development Bank, Africa Finance Corporation, African Infrastructure Investment Managers, Africa Legal Network, AfricInvest, Amethis, Asoko Insight, Àrgentil Capital Management, Casablanca Finance Authority, CDC Group, Clifford Chance, Coronation Capital, Development Partners International, DLA Piper; FMO, Goodwell Investments, International Finance Corporation, L.E.K Consulting, Mediterrania Capital, TNP, Udo Udoma & Belo-Osagie, and Verod Capital.
C002D5556
BUSINESS DAY
A7
Nigeria draws $70 million investment from AfDB and EIB he private sector is poised to get a boost from the planned $70 million (N21.4 billion) investment from African Development Bank (AfDB) and European Investment Bank (EIB). Over the years, access to cheap capital has been a major pain for most business in Nigeria, however the country may see a soft facelift as AfDB and EIB readies a $70 million investment in the Development Bank of Nigeria (DBN), created in 2016 to strengthen lending to SMEs. EIB finalized a $20-million equity stake in the new financing institution, alongside $50-million equity participation from the African Development Bank, according to a statement from the European Union Delegation to Nigeria released to journalists at the 2018 Spring Meetings in Washington DC.
generation and output diversification; nevertheless, there has been under-performance of these businesses and this has undermined their contribution to economic growth,” said Stefan Nalletamby, Director of Financial Sector Development Department at the African Development Bank. “Among the issues affecting their performance, the shortage of finance, particularly investment finance, occupies a very central position. Nigeria’s DBN is expected to contribute to mobilizing significant long-term financing to an important yet underserved sector with high development potential,” said Nalletamby. “The European Union is committed to supporting privatesector investment in Nigeria, the new backing for the Development Bank of Nigeria by both the European Investment Bank, the bank of the European Union and the African Development Bank, with
“This new private sector investment is crucial in creating jobs and enabling business expand and reduce limited access to long-term financing holding back economic growth,however EIB is pleased to support the DBN to strengthen private-sector investment in Africa’s largest economy,” said Ambroise Fayolle, Vice-President of EIB. Tony Okpanachi, Managing Director of DBN said with this partnership DBN can overcome the funding gap in the small and medium scale enterprises space and help businesses unlock opportunities across Nigeria. “DBN’s ambition is strengthened by the financial and technical support of international partners, including EIB and AfDB; the new institution builds on international experience and uses a business model that has demonstrated proven success to enhance private-sector investment across Africa and around the world where other financing options are inadequate or absent,” said Okpanachi in a press statement. Currently, new investment essential for companies to expand and create jobs is hindered by limited access to commercial banks. The DBN estimates that only 5 per cent of the 37 million entrepreneurs and small businesses in Nigeria that contribute about 50 per cent of GDP can access credit in the financial system. “Private sector businesses are critical to the development of the Nigerian economy as they possess huge potential for employment
13 EU member state shareholders, will make a clear contribution to tackling the lack of access to credit by entrepreneurs and businesses across the country,” Ketil Karlsen, Head of the European Union Delegation to Nigeria and the Economic Community of West African States (ECOWAS) said. Karlsen added, “With more investment, we hope to promote a vibrant economy and stimulate growth, employment and increase opportunities, especially for youth. Despite playing a crucial role in economic growth and poverty reduction, Small and Medium Scale Enterprises (MSME’s) are collectively, the largest employers in many low-income countries including Nigeria, yet their viability is being threatened by lack of access to risk-management tools such as savings, insurance and credit facilities. Indeed, their growth is often stifled by restricted access to credit, equity and payments services. In line with addressing the major financial challenges facing MSME’s in Nigeria, DBN was conceived in 2015 with the principal mission of increasing financial inclusion and improving access to fiancé. DBN’s main aim as stated on its website is “to alleviate financing constraints faced by MSMEs and small Corporates in Nigeria through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.”
DIPO OLADEHINDE
T
BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.
Email the PE & F team loladeakinmurele@gmail.com
Continues on page 34