Geldof-backed buyout fund raises €160m to invest in African firms
Live Aid organiser is trying to create a new boom on African continent, writes Nick Webb
AN Africa-focused private equity firm, fronted by former Boomtown Rats singer and Live Aid organiser Bob Geldof, has raised close to €160m from well-heeled investors keen to buy stakes in enterprises and companies across the continent.
Last week 8 Miles closed its first fund -- having raised €155m -- with pledges to invest from the World Bank, the African Development Bank, UK state overseas investment firm CDC Group, as well as institutional and private investors. African buyout fund Vital Capital is also a backer. Geldof helped set up 8 Miles with private equity veteran Mark Florman, who was a principal at Doughty Hanson, the buyout fund that owns Irish television station TV3 among its wide-ranging portfolio.
However, a combination of the eurozone debt crisis and the risk aversion of investors in recent months of stock market volatility has seen the size of the fund revised back sharply from the initial target of close to €750m. The closing of the funds was also delayed by the dire macroeconomic climate. Following the first closure of the fund last week, it is understood that 8 Miles plans to raise another €200m later in the year.
"Africa is now a continent of extraordinary business and investment opportunity," according to a statement from Geldof, the fund chairman. "Private equity is one way to support the enterprise and dynamism of the people of the continent and help provide the jobs and skills that are needed. I'm happy that 8 Miles helps signal that Africa is seriously open for business."
The growing middle classes in Africa and an average annual economic growth rate of 6 per cent over the past decade have put the continent on the radar of emerging markets investors. African stock markets are among the best-performing indices in the world as investors flee stagnant growth prospects in Europe. Egypt's Hermes Index is up over 30 per cent in the first seven weeks of the year with South Africa's JSE rising 7 per cent and the Namibian stock market up 8 per cent. Only Nigeria's stock market, of the main exchanges, is in negative territory for 2012, according to Bloomberg data.
"Sectors of investment which 8 Miles expects to focus on and will help provide jobs, skills and growth include agribusiness, consumer and retail, health, telecoms and business and financial services," according to a statement given to the Sunday Independent. The firm will be supported by a network of senior advisers, comprising industrialists, governance and industry experts to help filter through investment opportunities.
8 Miles -- which got its name from what is the shortest distance between Africa and Europe -- is one of a number of private equity firms targeting serious returns in the fast-growing market. Buyout behemoth Carlyle is raising over €400m for Sub-Saharan Africa and has opened offices in Nigeria and South Africa. Another firm, Helios, tapped up investors for over €700m last year to fund deals.
Geldof has a long way to go to catch Bono when it comes to spectacular investment plays, as the U2 lead singer is set to make a significant windfall from his investment in Facebook. Bono is involved with private equity firm Elevation Partners, which invested $270m for a 1.5 per cent stake in Facebook -- the shares are worth up to $1.5bn (about €1.14bn), although recent secondary market trades may see that valuation revised downwards by the time of the much-heralded IPO.
In any case, Geldof is already extremely wealthy in his own right. The Blackrock-reared man became one of the key movers in the British independent television and media sector in the Nineties when his rock career dimmed. He netted close to €8m from the sale of the Planet 24 TV production company to Carlton over a decade ago, pumping some of the windfall into AIM-listed media firm Ten Alps. Most of his wealth has been generated from television -- specifically reality television.
He owns a third of Castaway Television, which developed the massively successful Survivor TV show format. Geldof and his partners have bagged about €27m in dividends in the past 10 years and his stake in the company must be worth over €20m.
Sunday Indo Business