Eczellon Capital, an investment bank operating in Nigeria and other West African markets, has announced the launch of its West Africa focused Private Equity (P.E) Fund with a target size of $250 million, in a bet on growth prospects in Africa’s largest economy.
The seven-year fund has a target compound annual growth rate (C.A.G.R) of 30 percent over its lifetime, according to Diekola Onaolapo, CEO of Eczellon Capital.
“We are targeting deals in energy, infrastructure, oil and gas, power generation and a few other active growth sectors in Nigeria,” Onaolapo said, in a December 15 interview with BusinessDay at the firm’s head office in Lagos.
“Assets are much cheaper now with the recent stock market sell-off and negative sentiment. We are not short term oriented so we take the view that this is a good time to take positions.”
The fund, which is at an advanced level of commitment from investors, is expected to close between Q2 and Q3 of 2015.
The Fund will be managed by Eczellon International, with activities overseen by an investment committee that has Florin Vasvari, a professor and a non-executive director of Eczellon Capital, as one of its members. Vasvari teaches private equity, finance and accounting at the London Business School, United Kingdom.
The Fund will be for identified investment opportunities and already packaged deals, even as it expects a strong deal flow beyond the already identified portfolio.
In the main, the Fund will invest in and support unlisted enterprises with high capital growth potentials over the medium to long-term (ranging from three to five years).
There is a potential deal flow of $1 billion in the power sector alone, according to Lami Adekola, head, investment banking at Eczellon Capital, saying “the role of P.E in the second phase or refinancing of power assets cannot be overemphasised.
“We are already working with three generating companies (GENCOs) who we are looking to raise capital for refinancing of earlier loans…however we cannot fund all of that on our own and will be co-investing.”
Eczellon Capital has already assisted Nigerian companies in securing over $140 million in committed capital in 2014 alone, and seeks to further expand access to finance for its focus sectors in the coming years with the launch of this new Fund, according to Onaolapo.
Discussions and commitments are already at advanced stages with key prospective investors in the fund, which include Insurance Firms, Pension Funds, Development Finance Institutions and other Qualified Institutional Investors, as well as High Net worth Individuals in Nigeria and across the Middle and Far East.
The Fund will be administered in tranches over a two-year period. “Our goal is to aid the proliferation of global growth companies across Africa and to support governments in achieving the developmental objectives of their mandates,” Onaolapo said.
PATRICK ATUANYA
