Finance

Private Equity : A large American investor is said to be backing out of its African investments

Wednesday, 06 February 2019 12:45
Private Equity : A large American investor is said to be backing out of its African investments

(Ecofin Agency) - The African private equity environment could be losing one large American investor, credible sources reveal. According to the Wall Street Journal that cited a spokesperson, since about a year now, Blackstone embarked on a process to sell Black Rhino Group, an infrastructures investment firm. The purchasers are said to be the management team at the head of this New York-based investment firm since 2014.

The operation has never been disclosed and it seems that it has not been finalized yet. Blackstone is also said to be negotiating with the energy producer Globeleq, subsidiary of the Commonwealth Development Corporation, for the sale of its development and exploitation rights on an energy project in Nigeria.

The adventure started well during the acquisition of Black Rhino. “We are looking forward to partnering with Black Rhino to develop energy infrastructures and projects in Africa where investments needs are enormous”, said Sean Klimczak, Black Rhino’s CEO, when the two firms were entering into their partnership.

It is worth mentioning that the Bureau for African Affairs had elaborated an ambitious roadmap under the former US president Barack Obama. The infrastructures investments needs in Africa that motivated Blackstone are intact. According to the African Development Bank’s estimates, they nearly doubled to reach $170 billion yearly (from $90 billion).  

It may be that the Obama effect having faded, the lack of true commitment demonstrated by the current president has dampened enthusiasms.

There is also the African business environment that does not usually fit with the strategy of American investors who are regularly seeking big deals.

In 2017, KKR & Co, a New-York based private equity firm also sold the only acquisition it had in Ethiopia and dismantled its team. In 2016, it was the Boston based Bain Capital which let go of its equity in South African Edcon in the framework of a share against bonds operation valued at $1.5 billion with banks.

According to a report published by the African Private Equity and Venture Capital Association (AVCA), intermediary fund closes excluded, private equity resources destined to Africa were $400 million in H1, 2018, representing its lowest level since 2013.

Let’s also note that not all investment firms are wary about Africa. Some groups like Warburg Pincus, Carlyle Group and many others have embarked on new investments in the region. There is, for instance, the closing at more than $600 million of Emerging Capital partner’s ECP Africa Fund IV.

Idriss Linge



 
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