Investec PE Unit Plans to Sell Two of $155 Million Fund's Assets

  • Asset-manager unit seeks deals in sub-Saharan companies
  • Commodities impact on African economies making choices tougher

Investec Africa Private Equity, a unit of Investec Plc’s asset management arm, has started plans to sell stakes in two of the seven companies it holds in a fund that began in 2008 as slumping commodity prices hobble the region’s economies.

The $155 million Africa Private Equity Fund 1 includes Nigerian oil-and-gas producer Seven Energy, Angolan billboard company Big Media, Mozambican trucker J&J Africa, and OK Zimbabwe, that country’s largest supermarket chain, OK. IHS Towers, which supplies mobile-phone networks in Nigeria and surrounding countries, Lagos-based soap maker Daraju Industries Ltd., and South African mini-bus taxi leaser SA Taxi round out the list of assets in the fund.

“We’re in the process of seeking to exit a couple of those at the moment,” fund manager William Alexander said Wednesday in a phone interview from Cape Town. He wouldn’t name the companies or give a timeline for completing deals to exit the fund because the information isn’t public.

The pan-African mandate of Investec Africa Private Equity’s two funds puts pressure on managers to find investments in a region where commodity-price declines have hurt economic growth. Oil-dependent Angola and Nigeria, copper-reliant Zambia and mineral-rich South Africa are among those suffering currency depreciation as private equity companies hunt for viable consumer-facing and business-to-business operations.

Falling prices spell bad news for African economies

The second fund will be “substantially larger” than Fund 1 without being double its size, and the amount will be publicized before the end of the year, Alexander said. Fund 2 has three investments so far: a further stake in IHS Towers, South African consumer debt manager IDM Group, and mobile phone payment technology company wiGroup.

The fund targets companies with “decent” track records of revenue and cash-flow generation, that have capital to grow the business or where there is an opportunity to buy out owners. It aims for “significant” minority stakes that give it influence and control, or majority ownership, Alexander said. Using contacts that are strongest in Anglophone sub-Saharan Africa, it seeks businesses that have scope for expansion and isn’t interested in property, he said.

The Investec parent company, based in London and Johannesburg, includes a bank that makes private-equity investments off its balance sheet, separate from the asset management unit. “We benefit from being part of Investec Asset Management and having a lot of macroeconomic expertise and skill in our emerging-markets debt business,” Alexander said.

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