EU Teaming Up with a Private Equity Firm to Invest in Sub-Saharan Africa


April 27, 2015

According to recent reports, the European Union is about to get more involved with private equity investing. The organisation is teaming up with a private equity firm Aster Capital Partners, with the aim of investing around $60 million in energy companies across sub-Saharan Africa. The AFK Insider reported on the news on Sunday, stating the EU-backed Electricity Fund will be under the management of the Paris-based private equity firm.


The fund is looking to find around 20 suitable energy-focused businesses in the sub-Saharan region. The $60 million investment will be divided among the companies in the next five years.


The Partners
The Luxembourg-based European investment bank is among the investors. The bank is currently run by capital received from the 28 governments in the European Union. The bank is going to provide a $10.87 million core investment to the fund. The other investors in the fund include the French Development Agency (AFD), as well as the UK-based Commonwealth development corporation.


The Investments
As mentioned above, the fund is looking to invest in around 20 businesses. These businesses will be SMEs involved in electricity and related services. The fund is also interested in finding off-grid solutions and special technologies, such as solar home devices. The countries in the centre of attention include Kenya, Uganda and Rwanda.


The Hope
The fund aims to boost energy efficiency in the region, as well as bring about more investment and capital to the region. The bigger aim is to make sure the region’s 1 million low-income people have an access to electricity.


The World Energy Outlook has previously announced it believes the investment needed in the region will climb up to $400 billion. At the moment the region’s countries lack a proper energy grid. According to AFK Insider, “The combined capacity of the 48 sub-Saharan African countries is 68 gigawatts – roughly equivalent to that of Spain”.


The Private Equity Firm
Aster Capital Partners is a private equity firm that focuses on the energy-related sector. The company has raised funds for two separate funds, in total the funds raised amount to over $199 million. From the two funds, the firm has invested in over 35 companies, with 13 investments already made with the latest fund. Some of its most notable exits include the Netasq deal and the Microbridge deal.


The Lure of Sub-Saharan Africa
The emerging markets of Africa have been able to attract plenty of private equity investments in the recent months. Sub-Saharan Africa is among the hottest regions, having gained about $4 billion in investment deals in 2014.


Some of the big private equity firms got involved in the region last year. Carlyle Group’s fund closed in 2014 after raising around $698 million. Harith General Partners also managed to raise $580 million with its Pan-African Infrastructure Development fund. The most recent big fund was of course the sub-Saharan fund by the private equity firm Abraaj Group, which closed its $990 million fund at the start of April.


Although some have criticised the EU for getting involved with the private sector, it is a great sign of the strength of the African private equity lure. If you want to find private equity deal opportunities in Africa or other emerging markets, then check out DealMarket.

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