What Helios’ Hatching USD 1.25 Bn Says About African Investments

By  |  May 29, 2019

Helios Investment Partners is reportedly planning to raise funding to the tune of USD 1.25 Bn to invest across Africa.

The London-based private equity firm is believed to be in talks with asset managers and development agencies to foreshadow what would be its largest fund for investments in the continent.

Led by Tope Lawani and Babatunde Soyoye, Helios is one of the many private equities with a huge focus on African assets, especially as the economic recovery takes place in the continent.

Africa has some of the world’s fastest-growing economies, according to 2019 research. Sub-Saharan Africa is already home to nation recovery leaders such as Rwanda, Ghana, Kenya, Uganda, Ivory Coast, and others who make top ten.

As the continent experiences a turnaround of events for the positive development of its economy, investors are getting more attracted, and infrastructure plans are underway.

Recently, Microsoft, following Google and Facebook, set aside USD 100 Mn to build technology hubs in Nigeria and Kenya, in bid to harness the growth of the East African and West African country.

Regardless of the improvements witnessed, some investors remain lukewarm about putting their money in Africa. Potential spotters such as New York-based Blackstone are significantly scaling back in the continent. Even Bob Diamond, former chief of Barclays has his sights set elsewhere after futile efforts to get his banking venture off African grounds.

For Helios to be baking USD 1.25 Bn to focus on African assets, it means that more attention is drawn to the continent even amid multiple checkouts. It also means, to an extent, that Africa is promises substantial returns on investments as it gradually develops.

While the PE firm is holding its horses to close the fund, the facility could kick off before the end of the year. Case in point, the firm closed USD 1.1 Bn Africa-focused fund in 2015, exceeding its USD 1 Bn initial target.

Speaking of exceeding expectations, Mauritius-based PE firm, LeapFrog Investments, closed its emerging markets fund earlier this month at USD 700 Mn.

Not only was the facility USD 100 Mn more than its initial target, but also broke records for impact funds ever raised by a private equity fund. Kicking off, LeapFrog backed five companies, three of which were African.

According to this PwC report, Africa is continuing to receive a high level of interest as an investment destination from investors from across the globe including Africa, the US, the EU, and the BRIC (Brazil, Russia, India, and China) countries.

Despite the hurdles experienced in pricing assets in the continent’s markets, such as the lack of data and formal market impact valuation methodology, the region is attracting more investments than ever.

According to McKinsey, there are now 10,000 Chinese businesses in Africa. The Asian country’s increased investments have encouraged other countries, especially India, to pump in funds with the intention of harvesting huge turnovers.

PE funds invested USD 8.1 billion in African companies over 2014, marking the second-highest total ever after the USD 8.3 billion in 2007, according to data from the African Private Equity and Venture Capital Association.

According to research by Asoko Insight and Africa Capital Digest reveals, there are currently about 207 private equity investment firms in Sub-Saharan Africa. These include Brait, Development Partners International, Helios Investment, and Old Mutual Capital.

There are also about eight firms managing funds between USD 500 million and USD 1 billion. Furthermore, there are 60 firms with funds between USD 100 million to USD 500 million under management within Sub-Saharan Africa. Nevertheless, a huge chunk of firms in the region manages funds less than USD 100 million.

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