Atta Africa Financial Update

Key commercial and political activity in Africa for private equity investors by DCE Partners, UK Private Equity advisors to Atta.

Executive summary: China's US$60bn Africa commitment.

2015 was a notable year for African-Chinese relations and diplomacy. Officials crossed the Indian Ocean in both directions holding meetings in both; several important memorandums were inked; bilateral agreements were concluded. The culmination was the Johannesburg hosted Forum on China-Africa Cooperation (FOCAC) which brought together delegations from 50 African countries and China.

Since the FOCAC, China’s President Xi Jinping has pledged US$60 billion to African states - most of which is in the form of loans and export credits, only US$5 billion is to arrive as grants and interest-free loans. It is important to note that Chinese aid differs from OECD-defined official development assistance and is often tangled with other financial commitments.

At this stage, US$35 billion will go towards preferential loans, export credits, and concessional loans; US$5 billion will go to the China-Africa Development Fund (a private equity and venture capital investment arm of the China Development Bank); and $5 billion for the Special Loan for the Development of African SMEs. The balance to be used for similar projects.

This is a significant carrot that China is dangling in front of African leaders - allocations will very much depend on bilateral relations between China and individual African countries - African state leaders and other stakeholders will be competing for these sums of money.

54 Capital invests US$42m in Addis Pharmaceutical Factory

  • African focused private equity firm, 54 Capital, has entered Ethiopia’s pharmaceutical market via an investment in Addis Pharmaceutical Factory
  • Addis Pharmaceutical Factory is a leading pharmaceutical manufacturer in Ethipia
  • The transaction is structured as an initial investment of US$30m, with the option to invest a further US$12m

Xterra to back Nairobi property project with US$114m

  • Xterra Capital Advisors is reportedly planning to invest US$114 million in 90,000 square meters of high-end mixed used development in Nairobi
  • Xterra Capital Advisors is in the process of raising up to US$600 million in combined debt and equity
  • The Mauritian property fund, which announced its fundraising plans in November, will invest 34% of the combined capital in Kenya’s property market
  • Other target investment geographies include Nigeria, Ghana, Rwanda, South Africa and Uganda