FOCUS TO AFRICA
Edmond de Rothschild has amassed $530m for its first private equity fund focusing on deals in Africa, in the latest sign of investors' growing interest in the continent.
The fund will be managed by Amethis, a company majority-owned by the Swiss private banking group and founded by Luc Rigouzzo and Laurent Demey, two former top executives at French development financial institution Proparco.
The group, chaired by Baron Benjamin de Rothschild, the late Edmond's son, is joining Washington-based Carlyle and Dubai-based Abraaj in raising dedicated funds for Africa, tapping into yield-hunting investors warming up to Africa's steady economic growth and emerging middle class.
Private equity funds targeting the continent attracted $2.4bn last year, nearly double the amount collected the previous year, according to Preqin, the data provider. Earlier this year, Carlyle secured nearly $700m for its first sub-Saharan African fund, less than Helios Partners' $908m pool, which closed in 2011, the largest so far. New York-based KKR this month invested $200m for a stake in an Ethiopia-based exporter of roses, its first deal in the region, while General Atlantic hired an executive in London to explore African deals.
The inflow of capital was pushing up prices of the larger deals and that was partly why Amethis would instead target minority stakes in small to medium-sized companies, Mr Rigouzzo, who grew up in Ivory Coast, said.
"Some funds may not invest all the money they raised," he warned.
Wealthy families and entrepreneurs, who have committed about half the money to Amethis, have been quicker than institutional investors to see the appeal of investing in Africa. About three years ago, Ariane de Rothschild, Baron Benjamin's wife, who lived in Kinshasa, the capital of Democratic Republic of Congo, gave a mandate to the bank to build an investment platform focusing on Africa, said Johnny El Hachem, chief executive of Compagnie Benjamin de Rothschild Conseil.
"We are looking for high-return projects but with a strong social development aspect," Mr El Hachem said. "But we needed a team. We came across Luc and Laurent in 2011 and we decided to partner."
Amethis, with about 20 staff and operating from Nairobi and Abidjan, has already invested in five companies including Kenya-based Chase Bank and Petro Ivoire, an Ivorian gas distributor.
After five years, investors will have the option to convert their stakes in the fund into shares of a company that could then float to gain permanent capital. This would allow them to keep investments over a long period, rather than having to sell them after five to six years.
"Time counts in Africa. You can get much better returns if you stay longer," Mr El Hachem said.
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