Abraaj Group, a Dubai-based private equity group, expects to raise an additional $500m-$750m in capital and deploy $200m-$300m in sub-Saharan Africa from its existing funds over the next 12 months, Abraaj partner Sev Vettivetpillai told ft.com blog beyondbrics.
Abraaj, which has $7.5bn in assets under management and is based in Dubai, expects to complete four transactions within South Africa, Nigeria and Kenya by the end of the year, spread across the financial services, consumer goods and logistics sectors.
“We expect the next 12 to 18 months to be quite active,” said Vettivetpillai. “The four deals. I would call them landmark deals – the companies that we’re working with and looking to buy are regional players already.”
Vettivetpillai also noted that Abraaj would like to do more deals in oil-rich Angola and in Ethiopia, as well as in Ivory Coast, where the group made an investment in the African Industrial Services Group (AIS) in October last year.
Abraaj’s most celebrated recent deals have been in Ghana, however, where in 2013 the group majority acquired Ghana Home Loans and instigated a $360m joint acquisition of Fan Milk, a prominent producer of West African frozen dairy products, in conjunction with Danone.
However, a lack of clarity with regard to the repatriation of capital has been highlighted as an inhibitor of FDI, and an anonymous private equity investor source of Gulf Africa Review confirmed that issues with capital repatriation had forced their company to pull out of an Ethiopian project.
In reponse to this challenge, bilateral agreements that protect investment activities the GCC and Sub-Saharan Africa are increasingly being negotiated to smooth business between the regions – a recent example being the double taxation agreement negotiated between Qatar and Kenya.
Abraaj also intends to investigate further possibilities in healthcare – a sector where the group already has a $105m Africa Health Fund, but where it would also like to explore the delivery of scaled health services as an alternative to the apparent fragmentation in current responses to the African market.