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TPG Making Its First Foray into Africa with $1 Billion Investment

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June 19, 2015

 

One of the world’s largest private equity firms is venturing into the African markets for the first time. TPG announced its plans to invest up to $1 billion in Africa. The investment will be a tie-up venture with a Sudanese billionaire Mo Ibrahim and his private equity firm, Satya Capital.

 

The New Adventure

 

The investment will be the first time TPG is investing in the emerging markets in Africa. Instead of opting to raise an Africa-specific fund, the investments will be made from the TPG Growth fund. TGP Growth is the middle market platform for the US-based private equity firm.

 

The private equity firm is joining forces with Satya Capital’s $500 million private equity fund. The firm together with Mr Ibrahim will be able to help TPG learn about the markets in the region and find the right local investment opportunities.

 

William McGlashan, a managing partner at TPG Growth, told the Financial Times, “The last major market that we have not gone into in the world is Africa, and we wanted to do it in the right way.”

 

Finer Details Remain Unknown

 

So far, the two partners have not released a great deal of information regarding the deal. According to the firms, the partnership is done through a “joint platform”, with TPG Growth using some of Satya’s staff.

 

The private equity firm said it is looking to invest anything from $1 million to $200 million in the African businesses. Satya has previously focused on deals in the healthcare, education and retail sections, as well as having invested in a bank.

 

“There is no deal too small or no deal too big for us; that is why this deal is unique,” said Mr Ibrahim in the Financial Times. He was also quoted in the Wall Street Journal stating, “Africa has interesting startups which can very quickly become very interesting businesses, if they have the support.”

 

According to reports, the first investment could be expected within the next weeks.

 

An Unlikely Introduction

 

The private equity firms met in interesting circumstances as the Irish rock star Bono introduced the firms to each other. Bono, the frontman of U2, has long been a noted anti-poverty campaigner in Africa, but he is also an investor in TPG.

 

TPG Capital’s founder David Bonderman and Mr McGlashan met with Satya Capital’s owner Mr Ibrahim in a meeting hosted by Bono.

 

Mr McGlashan told the Financial Times, “Bono’s a friend…he obviously has a long history in Africa; it was the natural thing to ask his advice.”

 

A Growing Market

 

African private equity market is continuing to grow. Last year saw fundraising efforts for sub-Saharan Africa funds hit $4 billion, with all the biggest US-based private equity firms like Blackstone Group and KKR investing on the continent.

 

Furthermore, the continent is expected to grow by 4.5% in 2015. With private equity deals hitting a seven-year high last year at $8.1 billion, this year could prove to be even more lucrative for the region.

 

If you are looking for private equity deals in the emerging markets, check out DealMarket.

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