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PRESS RELEASE| PRIVATE EQUITY INDUSTRY WELL POSITIONED TO NAVIGATE COVID-19 CRISIS

After experiencing accelerated growth for the last three years, Sub-Saharan Africa is expected to go deep into contractionary territory in 2020. Highlights from the SAVCA 2020 Private Equity Industry Survey, however, indicate that the private equity industry remained resilient in the face of weak macroeconomic circumstances during the 2019 calendar year, which bodes well for…

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After experiencing accelerated growth for the last three years, Sub-Saharan Africa is expected to go deep into contractionary territory in 2020. Highlights from the SAVCA 2020 Private Equity Industry Survey, however, indicate that the private equity industry remained resilient in the face of weak macroeconomic circumstances during the 2019 calendar year, which bodes well for the industry’s ability to navigate the COVID-19 crisis.

This is according to Tanya van Lill, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), who was speaking at the survey launch last night. “There’s no denying that the first half of 2020 has been a total whirlwind, but this latest survey – albeit based on 2019 data – provides useful insight into industry trends and signals the valuable role that private equity will play in the region’s economic recovery.”

Notably, van Lill highlights a significant increase in funds under management. “The private equity industry had R184.4 billion in funds under management (FUM) at 31 December 2019, up from R171 billion in 2018, representing a compound annual growth rate (CAGR) of 9.2% since 1999 when the survey first began.

“This increase in FUM is a positive indicator for the industry, as it should lead to increased investment into the region,” she explains, adding that despite Southern Africa’s tough economic conditions over the past few years, the industry was still able to raise R21.7 billion in 2019 – an impressive 69.5% more than the R12.8 billion raised in 2018.

“This strong fundraising activity is indicative of the fortitude exhibited by the private equity industry,” van Lill comments, adding that of the funds raised, R7.7 billion (35.3%) stemmed from South African sources, with R3.7bn of total funds earmarked specifically for investment in South Africa.

“The cost of investments in 2019 totalled R25.4 billion – with the top sectors invested in being infrastructure and energy, followed by telecommunications, retail and real estate. Also interesting to note is that – as a proportion of investments made by cost – over 50% of the investments made were to support portfolio companies with expansion and development.”

Highlighting the significant surge in infrastructure investment, from 6.1% in 2018 to 34.7% in 2019, van Lill notes the positive knock-on effects this offers. “Private equity investment in African infrastructure has been an emerging theme over the past decade, with funds from various regions investing actively in infrastructure projects in the energy, transport and ICT sub-categories.

“This can and does serve as a catalyst for development on the continent, in a way that fosters the achievement of targeted and specified developmental goals. Moreover, infrastructure investment opens up new opportunities for add-on or related investments. For example, a toll road project creates the scope for property development, and a host of other down-stream investment activities.”

On the topic of exits, van Lill says that funds returned to investors in 2019 totalled R12 billion, with disposals during the year amounting to R5.3 billion. “In comparison, the annual average funds returned to investors over the last five years (2015-2019) was R14.3 billion, with disposals averaging R8.6 billion over that period.”

Finally, van Lill says the report offers valuable insight into the transformation that has been realised over the past year, not only through investments, but also through the private equity professionals that form part of the industry. “In 2019 we saw an increase in African professionals in the industry, which now account for 43.2% of all professionals (2018: 34.9%).

“Also encouraging is that the vast majority (98%) of fund managers now consider, at a minimum, Environmental, Social, and Governance (ESG) factors when making an investment decision, and 78% of fund managers indicated that their key performance criteria are linked to achieving goals that go beyond financial returns,” says van Lill, who notes that the industry is also having a positive financial impact on portfolio companies. “Findings from the 2020 Survey show total earnings before interest, tax, depreciation and amortisation (EBITDA) for all portfolio companies captured by the survey increased by an average of 21.4% from 31 December 2018 to 31 December 2019.

“Over the same period, the total number of employees for portfolio companies increased by an average of 23.5%, while total revenue of the portfolio companies climbed by an average 27.4%. Similarly, the total capital expenditure of portfolio companies increased by an impressive average of 44.1% from 31 December 2018 to 31 December 2019.

“With many companies around the globe potentially re-evaluating their supply chains in the wake of COVID-19, it is increasingly likely that African economies will look inward to source their needs from a more local footprint. With the need for a more inclusive and sustainable development path, this provides numerous opportunities to making a long-lasting, meaningful impact to millions of people through the investments made by private equity funds, in addition to generating returns,” van Lill concludes.

About SAVCA:

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about R184 billion in assets under management through 170 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry.

SAVCA also provides relevant and insightful research, offers training on private equity and creates meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

Source: https://savca.co.za/press-release-private-equity-industry-well-positioned-to-navigate-covid-19-crisis/general/

Private Equity

Lorax Capital Partners pulls in $142m for its sophomore fund

Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

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Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

The fund, LCP II, has a target size of $250m and will focus on midcap companies in Egypt that are focusing on local consumption and production as well as financial inclusion.

Lorax will also back companies that are looking to expand regionally.

The investor aims to implement high-quality governance and environmental and social practices within portfolio companies and help them increase their value creation.

There have been five LPs to commit to Lorax’s new fund, so far.

Lorax Capital Partners director of operations Adnan Razzak said, ”We appointed Apex due to their strong reputation and ability to provide the all-inclusive fund administration, accounting and investor reporting services required across multiple jurisdictions.

“We have been particularly impressed with their ability to guide us through regulatory challenges and our decision to domicile the fund in the Netherlands. Our management team has an unmatched track record in sourcing, executing and managing transactions in Egypt and Apex’s support will enable us to focus on these core competencies.”

Founded in 2015, Lorax is an Egypt-focused private equity firm and over the past five years it has deployed around $175m into five companies.

Last year, Lorax aided Helios Investment Partners and Enterprise Fund with their purchase of a 96.6 per cent stake in agricultural seeds provider Misr Hytech Seed International.

Copyright © 2020 FinTech Global

Source: https://www.altassets.net/private-equity-news/by-news-type/fund-news/lorax-capital-partners-pulls-in-142m-for-its-sophomore-fund.html

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Private Equity

Lobby group for Black women urges firms to ‘go beyond solidarity statements’

The 300-strong group calls asset managers to build an anti-racist portfolio, divesting from companies that benefit from business models that perpetuate racial inequities

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Industry group Black Women in Asset Management has published an open letter calling on institutions to promote racial equity through their portfolios — and take action if companies they invest in do not.

The letter comes as the City took a hard look at racial diversity within its ranks over the summer this year.

“As Black women professionals in the asset management industry, we call on investment firms and institutional investors in our industry to go beyond solidarity statements and instead commit to action, activism, and accountability to dismantle the racial inequities plaguing society,” the letter, released on 26 October, reads.

The death of George Floyd at the hands of three police officers in the US on 25 May and the disproportionate impact the Covid-19 pandemic is having on people from Black, Asian and Minority ethnic backgrounds triggered Black Lives Matter protests around the world, including in London and elsewhere across the UK.

In response, financial services firms and their executives made statements saying the sector could do better and promised to fight for a better society, although activists have said that actions speak louder than words.

BWAM, the industry organisation that counts 300 members, was founded in May 2019 by Jacqueline Taiwo, principal at TowerBrook Capital Partners, and Mariam Akanbi, senior legal counsel at ARCH Emerging Markets Partners.

“Dismantling systemic racism creates a more sustainable and equitable society. However, investment firms have been slow to see racism as a serious investment risk,” said Taiwo in a statement, explaining why the group decided to pen the letter.

The open letter makes five recommendations for investment firms and institutional investors. These include calling on firms to build an anti-racist portfolio, which would entail setting metrics to examine a company’s demonstrable commitment to racial diversity.

Following the research, the group subsequently urged asset managers to divest from companies that benefit from business models that perpetuate racial inequities or target vulnerable communities, citing examples like prison labour and immigration detention.

BWAM also highlights the necessity for communication of expectations to portfolio boards on considering racial implications on strategic decisions, pointing out that this is already the case on issues such as climate change.

Other recommendations include committing resources to encourage young Black women to work in finance as well as advocating for policy change both externally and internally.

“I believe BWAM’s recommendations provide a meaningful framework to bring about long overdue change in our industry,” said Adebanke Adeyemo, general counsel of Vantage Infrastructure and a member of BWAM’s impact committee, said in a statement.

“I am publicly endorsing this letter because I know that many of my peers may not feel empowered to do so. I have been there in my career and I understand it.”

To contact the author of this story with feedback or news, email Bérengère Sim

Source: https://www.penews.com/articles/lobby-group-for-black-women-urges-firms-to-go-beyond-solidarity-statements-20201026

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Private Equity

Dunkin’ reportedly in talks with PE-backed group to go private

The deal worth $8.8bn with Inspire Brands, owned by private equity firm Roark Capital, would delist the coffee and doughnuts chain

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Owner of Arby’s, Buffalo Wild Wings could buy company in deal worth $8.8bn

Dunkin’ Brands Group is reportedly in talks to go private in a sale to private equity-backed Inspire Brands.

The New York Times reported Sunday, 25 October, that Dunkin’, the parent company of the former Dunkin’ Donuts and Baskin-Robbins ice cream, could sell itself for $106.50 a share, a 20% premium over Friday’s closing price, for an implied market value of about $8.8bn. The Times said a deal could be announced as soon as today, 26 October.

Inspire Brands, which is backed by Roark Capital, owns a number of restaurant chains, including Arby’s, Buffalo Wild Wings, Sonic and Jimmy John’s.

In a statement to the Times, Dunkin’ confirmed that there have been preliminary talks over an acquisition, but a deal is not certain and neither side will comment further unless the transaction is finalized.

Dunkin’ Brands has more than 13,000 franchised Dunkin’ locations and about 8,000 Baskin-Robbins locations.

Write to Mike Murphy at AskNewswires@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/dunkin-reportedly-in-talks-with-pe-backed-group-to-go-private-20201026

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