Abraaj collects almost $1bn for sub-Saharan Africa

The Abraaj Group has closed its third sub-Saharan Africa-dedicated private equity fund on its $990 million hard-cap, according to a statement from the firm.

Abraaj Africa Fund III will focus on mid-market companies in the consumer goods and services, consumer finance, and resource and infrastructure services sectors in the core geographies of Nigeria, Ghana, Côte d’Ivoire, South Africa, and Kenya.

The fundraise took around 12 months, with the group seeing interest “substantially in excess” of the final figure, Mustafa Abdel-Wadood, partner and head of the group’s Regional Fund Businesses, told sister publication Private Equity International.

Institutional investors, pension funds and sovereign wealth funds account for 76 percent of the committed capital, with 64 percent of the capital committed coming from European and North American investors. African institutions also subscribed for “significant allocations” to the vehicle, Abraaj said.

The vehicle’s investors include the International Finance Corporation, the investment arm of the World Bank. In a filing last summer IFC said it aimed to invest up to $50 million in the fund, and will not exceed 20 percent of the total committed capital, PEI reported earlier.

Abdel-Wadood declined to disclose the exact GP commitment to the vehicle, but said the group “always make[s] a reasonably substantial GP commitment by industry standards.”

The high demand for the vehicle “reflects increasing investor appreciation for the powerful growth story unfolding across Africa,” Arif Naqvi, Abraaj’s founder and group chief executive, said in a statement.

“The world has taken note of what we all along have seen as a very, very strong investment opportunity driven by the growing middle class, driven by the demographics, driven by the improved governance on the continent,” Abdel-Wadood said.

The group will be looking to make both majority and minority investments, provided the minority positions incorporate the relevant minority rights to allow Abraaj to control the company’s growth agenda.

In October the group acquired a majority stake in Liberty Star Consumer Holdings, a South African food manufacturer, from existing shareholders including South African firm Old Mutual Private Equity, pan-African private equity firm Development Partners International and African private equity firm Metier in a deal valued at around $300 million, PEI reported at the time.

Abraaj, which has deployed around $3 billion across Africa, has made 67 investments in nine sectors in sub-Saharan Africa, successfully achieving 30 full and partial exits. The firm has 27 investment and operating professionals based across four offices in Nairobi, Lagos, Accra, and Johannesburg.

The group is also currently in market with its second North Africa-focused vehicle, which is targeting $200 million. The fund will invest in small and medium-sized companies operating primarily in Morocco, Tunisia, Egypt and Algeria, PEI reported previously. Abraaj declined to comment on this fundraise.

This is the latest Africa-dedicated vehicle to close after a strong start to the year for the region. In January Helios Investment Partners, a pan-African private equity firm, closed its third fund on $1.1 billion, and last month pan-African player Development Partners International closed its second vehicle on $725 million.

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Reporting by Isobel Markham