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Buyout group Helios raises record $1bn Africa fund - FT.com

http://www.ft.com/intl/cms/s/0/bec321e6-974d-11e4-9636-00144feabdc0.html?ftcamp=crm/email/2015112/nbe/GlobalBusiness/product#axzz3ObtY0KYo

Buyout group Helios raises record $1bn Africa fund
[image: Tope Lawani, co-founder of Helios Investment Partners]©FT
<http://www.ft.com/servicestools/terms/ft>

Tope Lawani, co-founder of Helios Investment Partners

The first $1bn-plus Africa-focused private equity fund has been raised by
Helios Investment Partners, a London-based group founded almost a decade
ago by a pair of Nigerian-born dealmakers.

The record size of the fund signals the growing appetite for a continent
that until a few years ago had been largely ignored by global investors.

Africa still attracts a tiny proportion of the world’s private equity
money, even compared with other emerging regions, notably Asia and Latin
America. But interest has increased recently, buoyed by strong economic
growth.

After stagnating for two decades, African gross domestic product per capita
has surged almost 40 per cent since 2002, fuelled by high commodity prices,
the rise of a small consumer class, and cheap Chinese loans.

The strong growth has encouraged regional and international private equity
groups. US buyout group
<http://www.ft.com/cms/s/0/e82d07fe-c4b7-11e3-8dd4-00144feabdc0.html>Carlyle
<http://markets.ft.com/tearsheets/performance.asp?s=us:CG> last year
launched a nearly $700m fund to invest in the region, while US rivals KKR
<http://markets.ft.com/tearsheets/performance.asp?s=us:KKR> and Blackstone
<http://markets.ft.com/tearsheets/performance.asp?s=us:BX> have also struck
regional deals.

Dealmaking among companies in the sub-Saharan region has been strong during
the past year as investors bet on growth. Recent transactions
<http://www.ft.com/cms/s/0/47dee88a-795c-11e4-a57d-00144feabdc0.html?siteedition=uk>
include an alliance between brewer SABMiller
<http://markets.ft.com/tearsheets/performance.asp?s=uk:SAB> and Coca-Cola
<http://markets.ft.com/tearsheets/performance.asp?s=us:KO>; the entry of
French insurer Axa in Nigeria and a large merger in the retail sector in
South Africa.

Helios
<http://www.ft.com/cms/s/0/4b0fc608-84fa-11e2-88bb-00144feabdc0.html?siteedition=uk>
plans to wrap up fundraising for its latest vehicle at $1.1bn — the maximum
that it promised it would take from investors. About 60 per cent of the new
fund has come from existing investors. It is the third fund that Helios has
raised since it was established in 2007.

Tope Lawani, Helios co-founder, said in an interview with the Financial
Times that the size of the capital rising and the participation of pension
funds and sovereign wealth funds was a sign that “private equity in Africa
is maturing”. Until now, wealthy families and entrepreneurs have been
quicker than institutional investors such as pension funds to see the
appeal of Africa.

Although more institutional investors are pouring money into private equity
funds for Africa, some remain worried about their exit strategy as capital
markets in the region — particularly stock exchanges — are still in their
infancy, with the exception of South Africa and, to a lesser extent,
Morocco, Nigeria and Kenya.

Buyout groups raised $3.3bn for Africa funds in 2013, the latest year with
full data, compared with a peak of $4.7bn in 2007, according to estimates
by EY, the consultancy.

The arrival of new investors to Africa coincides, however, with economic
trouble in the region as commodities prices tumble and countries brace for
the impact on capital flows of an anticipated increase in US interest rates.

Mr Lawani said that in the near term many African countries were going to
suffer an “adverse impact” on their currencies as capital flew back to the
US.

“We are witnessing sharply lower commodities prices and it is reasonable to
expect African currencies to lose value against the dollar,” he said. But
he claimed that the downturn would turn into an opportunity for investors
holding large amounts of US dollars, such as Helios. “It is an excellent
time to invest: asset values are going to come down,” he said.

Helios held the previous record for the biggest private equity fund in
Africa, which it raised in 2011, at $908m. Earlier this year, Edmond de
Rothschild amassed $530m
<http://www.ft.com/cms/s/0/83317ac4-fdd8-11e3-acf8-00144feab7de.html#axzz3Nxu3oVeA>
for its first buyout fund focused on deals in the continent.

In 2012, Sir Bob Geldof
<http://www.ft.com/cms/s/0/5ab51900-dfe0-11e2-9de6-00144feab7de.html?siteedition=uk>,
the musician and campaigner for aid to Africa, raised $200m for his 8 Miles
fund focused on the continent.


Eric D. Schwerin
eschwerin@rosemontseneca.com

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