DealMakers AFRICA Q3 2020
East Africa private equity activity in review | Q1-Q3 2020
by Kevin Kuria
Investments & Exits
Private equity’s slow down in investment activity in Q3 2020 can largely be attributed to the coronavirus pandemic. 11 deals with a disclosed deal value of c. US$144 million were recorded in the three months to September, down from disclosed deal values of c. US$220 million and c. US$216 million in Q1 and Q2. The median deal value, however, increased to c. US$14 million from c. US$10,5 million as at June.
The exit market remains subdued with just one exit having been announced in July. Whilst poor performance due to COVID-19 is likely to impede exit activity, fund life pressures may catalyse some exits in the year. Anecdotal evidence from our market participation suggests that, in some instances, exits are being completed to promoters, transactions which are mostly unannounced.
Q3 2020 Fund Raising
Fundraising activity in Africa has been reduced in 2020, as fund due diligence has been prolonged by the travel restrictions of COVID-19 and investors turned focus to their existing investments in the wake of the pandemic. The industry, however, continues to demonstrate resilience and confidence in the African market. The Africa Venture Capital Association (AVCA) reports that ‘by the end of H1 2020, Africa’s private equity industry received commitments of US$1,1 billion (including both interim and final closes). Below are some of the financial closes announced in Q3 2020, by funds actively investing in East Africa.
XSML achieves first close of its African Rivers Fund III
XSML, a private equity fund manager active in Central and East Africa, has announced the first close of its African Rivers Fund III (ARF III) at US$54 million. For this first close, BIO (Belgium Investment Company for Developing Countries), the Dutch Good Growth Fund (DGGF, managed by Triple Jump), FMO (the Dutch development bank) and IFC (a member of the World Bank Group), which are all existing investors in Fund I and/or II, are joined by Swedfund (the Swedish Development Finance Institution) and the SDG Frontier Fund (which includes nine private and institutional investors from Belgium). XSML expects to achieve final close in the next 12 months at US$80 million.
BlueOrchard achieves final close
Swiss impact investment manager, BlueOrchard Finance Ltd (BlueOrchard), has held the final close of the InsuResilience Investment Fund (IIF) Private Equity Sub-Fund, an initiative to improve access to climate insurance across the developing world. The fund has already made six investments across emerging markets, helping to protect more than 20 million poor and vulnerable people from the effects of climate change.
Kuria is a Senior Associate with I&M Burbidge Capital, Kenya
(stories sourced from Africa Private Equity News).