The 2023 DealMakers AFRICA Annual issue is out.
Criteria changes are coming for West Africa deal and transaction tables... watch this space!
Amethis Retail and Gakiwawa Family Investments’ exit of a 40% stake in Naivas
Amethis Retail, led by private equity fund, Amethis and including MCB Equity Fund, the International Finance Corporation and German fund, DEG, together with Gakiwawa Family Investments, the holding company of the founding family of Naivas have exited their investment in Kenyan retail chain, Naivas in a deal estimated to be worth Sh18,25 billion (US$151,97million). This represents almost three times the price paid by the minority shareholders just two years prior, in 2020, when they acquired a 31.5% stake for Sh6 billion. At the time, the family’s stake was diluted to 68.5% and the money was spent on fuelling the retailer’s growth across the country.
The 40% stake will be acquired through an investment vehicle called Mambo Retail, by a consortium led by Mauritian conglomerate, IBL Group (taking an effective 26.32% equity stake for $100 million); French fund, Proparco (8.29% for $31,5 million); and a reinvesting DEG (5.39% for $20,47 million).
The deal values Naivas at Sh45,6 billion ($379,9 million). Naivas, Kenya’s largest retail chain with 84 outlets spread across 20 towns in Kenya and over 8,000 people in its employ, will continue its expansion across various formats, responding to consumers’ needs and increasing demand for food quality and safety. IBL views the investment as a long-term partnership, in line with its investment principles and strategic intent to establish a long-term presence in the East Africa region, actively supporting growth strategies by leveraging its core operating capabilities.
PRIVATE EQUITY DEAL OF THE YEAR 2022
EAST AFRICA
The deal was complex, the result of a tight timeframe imposed as closure was required by the sellers ahead of the Kenyan general elections. The deal had to be completed within a couple of months from the start of the legal negotiations, and notification to the COMESA Competition Commission was required due to the value and multijurisdictional nature of the transaction.
The family of the late businessman, Peter Mukuha Kago, who founded the business in 1990, will retain a controlling stake in the supermarket. Via its vehicle, Gakiwawa Family Investments, the family will have received c. Sh3,8 billion ($32,8 million) for its 8.5% stake.
Advisers: Rothschild & Co., Bowmans, Benoit Chambers, Kaplan & Stratton, EY and PwC.
There were notable complexities to the transaction, as the deal was multijurisdictional. AutoXpress operates in four African countries, with its holding company in Mauritius, so regulatory approval was required from competition authorities; and though still relatively novel in the region, the use of W&I insurance in this transaction was the largest to date, and only the second transaction in the East Africa region to use it.
The founders have retained the majority stake in AutoXpress, and the vision for the next stage of the company’s growth phase is to strengthen its pan-regional business through a strategy to enter new markets, leverage technology and further improve access to its services.
Advisers: DC Advisory, Bowmans and Anjarwalla & Khanna and DLA Piper | IKM Advocates
Eurapharma’s acquisition of a 30% stake in Goodlife Pharmacies was announced in March 2022, following LeapFrog Investments’ partial equity exit from the largest private East African pharmacy chain.
LeapFrog first invested in Goodlife in 2017, through the LeapFrog Emerging Consumer Fund III, and it remains the major shareholder following its partial exit and the onboarding of an experienced pharmaceutical group with the expertise to help take Goodlife to greater levels. Eurapharma is the healthcare division of the CFAO Group and wholesale distributor of quality pharmaceuticals across Africa, where it owns and operates subsidiaries in 23 countries. It is envisaged that the strategic partnership will give East Africans better access to quality drugs and health services.
LeapFrog’s partial exit of Goodlife Pharmacies
In April 2022, Actis announced the successful exit of its 36% minority stake in AutoXpress International via an auction process. Its investment in the largest importer, distributor and retailer of tyres was sold for an undisclosed consideration to a consortium comprising AfricInvest and the International Finance Corporation.
Actis exit of 36% stake in AutoXpress to AfricInvest and IFC
Runners Up (in no particular order)
EAST AFRICA
AutoXpress, founded in 1958, currently operates 56 retail and wholesale branches across Kenya, Tanzania, Rwanda and Uganda, selling c. one million tyres per annum. Since the investment by Actis in 2014, AutoXpress has more than doubled its number of branches, and grown retail sales contribution from 15% to 35%. It employs more than 900 professionals worldwide, and has expanded its longstanding range of products and services – introducing car servicing and brakes replacement – to become the leading automotive aftermarket player in the region. With Africa’s automotive and related sectors the most underdeveloped in the world, prospects for growth are good, with East African countries such as Kenya and Uganda having experienced double-digit growth in demand for parts over the past few years.
Established in 2014, Goodlife Pharmacies has developed into an integrated, omnichannel health hub, represented in c. 100 locations in Kenya and Uganda and reaching 1,9 million people. It provides a range of holistic services, including laboratory diagnostics. The company has launched an e-pharmacy platform with home delivery and a telehealth service, offering new access points for remote and regional people, or those facing cultural barriers that limit their travel.
Goodlife’s focus on innovation has enabled it to rapidly transform from a traditional brick-and-mortar pharmacy chain. It has pioneered a unique product range, including single unit medicine sales, to create price points that compete with informal vendors like roadside medical stands. In the process, it is encouraging a new consumer segment to engage with pharmacies rather than informal, counterfeit vendors.
Goodlife has an ambitious expansion plan – to operate more than 250 stores by 2025, and to broaden its reach to over 8,5 million people, half of whom earn between US$2 to $10 per day. It aims to intensify its social impact through the launch of a new format and brand offering specifically designed for lower-income populations, the possibility of which has been enabled by the addition of its newest investor.
Advisers: ADVANT Altana, Kaplan & Stratton, Debevoise & Plimpton, MMAN Advocates, and Katende, Ssempebwa & Co. Advocates.
