Initial Public Offering (IPO), Sale to Strategic Buyers, Secondary Market or Management Buyout (MBO) - each of these strategies has its own advantages and considerations, and PE firms seeking to deliver superior returns must choose the one that aligns best with their investment goals and the specific circumstances of the portfolio company, writes Albert Alsina, Founder and CEO, Mediterrania Capital Partners.
Analysis & Strategy
Verdant Capital Hybrid Fund has invested USD 9 million in LOLC Africa, promoting financial inclusion and job creation through the financing of Micro, Small and Medium Enterprises (MSMEs) in Africa.
Nicholas P. Piquito, CEO, Asset Management, African Alliance Group
The majority of African tech investors (71%) will not invest follow-on funding in a startup failing to provide them with regular reporting updates, according to a newly-released report from Wimbart, a PR agency specialising in tech & startup sectors across Africa and emerging marketsю
The first half of 2023 saw 263 VC deals take place in Africa’s venture ecosystem, allocating a cumulative $2.1bn of capital to 258 unique companies. This corresponds to a 40% decrease by both volume and value compared to the $3.5bn raised in 2022 H1. At slightly over $1bn raised each quarter, this contraction in startup funding is being referred to by some as a “funding winter” for African venture capital.
Until recently, Ghana was considered a macroeconomic and political model in sub-Saharan Africa: in 2019, the World Bank described it as ‘a rising growth star’. However, in May 2023, the IMF signed a new bailout agreement worth $3bn over three years. It’s a program that’s widely seen as a band-aid for a host of long-term economic challenges facing the country - a net importer - including a balance of payments deficit. The nation’s public debt is nearly as large as its annual economic output, inflation has been running at over 40% in 2023 and Ghana’s currency, the Cedi, has fallen by more than 45% against the dollar since January 2022. The bailout will do little to address poverty, create new jobs, boost salaries or address the rising cost of living facing Ghanaians.
The African Private Capital Association (AVCA) and the Tony Blair Institute for Global Change (TBI) have announced the release of the Climate Financing in Africa: Strategies for the Future report, a new study outlining the current landscape of investment in building Africa’s climate resilience.
Next year marks the 20th anniversary of the Broad-Based Black Economic Empowerment Act 53 of 2003. The financial sector has made extensive advancements in achieving parity across multiple segments, but control and ownership remains largely uninterrupted. A report published by the FSCA in 2022 states that the South African financial sector is “concentrated and interconnected with the largest banks, insurers and fund managers controlling the majority of assets”. It is against this backdrop that the sector can expect a flurry of interventions designed to accelerate the adoption of B-BBEE and promote competition - some of which are explained below.
HAVAÍC’s Rob Heath takes the long view to unpack the perceived downturn in African Venture Capital (VC) funding. Here’s what the data really means and what the future holds for this burgeoning alternative asset class in Africa.
The financial ecosystem in Africa is reaching an exciting new phase of development, especially in terms of the provision of financial services for the underbanked and unbanked. Inclusive financial institutions (IFIs) focusing on this segment of the market, and rather than traditional banks, continue to be at the vanguard of financial inclusion. For the IFI sector to continue expand, it must attract additional capital, which in turn requires commercial success.
Access to capital is probably the most significant factor in the success of growth-stage businesses. While investment funding is well within reach in many European countries (especially Scandinavian countries, and in Germany, Switzerland, Luxembourg and the UK), lack of access to finance hamstrings businesses in Africa in terms of their ability to expand.
Albert Alsina, CEO and Group Managing Partner, Mediterrania Capital Partners: In order to prepare for a successful exit, we always begin to discuss the exit before the investment is executed to ensure there is full alignment of interest with the company shareholders early on and avoid future surprises. At that time, the PE firm should always provide the partner company with a comprehensive analysis including advantages and disadvantages of potential exit routes such as an IPO, Secondary Sale, Trade Sale, MBO with financing, etc. During these initial discussions, the PE firm and the company shareholders should choose one or two options to focus on and begin to consider the most appropriate timing and process.
South African private equity (PE) and venture capital (VC) activity is improving after Covid-induced uncertainty, with industry players reporting an increase in transactions. Some notable trends have emerged and are expected to accelerate into the remainder of 2022, writes Tanya van Lill, CEO of the South African Venture Capital Association (SAVCA).