JOHANNESBURG Jan 23 South Africa's Ethos
Private Equity has raised $800 million for a new fund that will
look for opportunities in the continent's biggest economy and
its fast-growing neighbours in one of the largest amounts
secured by an Africa-focused fund.
Ethos, one of South Africa's top private equity firms, said
it had beaten an initial target of $750 million, underscoring
foreign investors' desire to gain exposure to sub-Saharan Africa
through its most developed economy.
"South Africa has obvious advantages in the context of
infrastructure and corporate governance. Investors see those as
a huge plus in terms of tackling sub-Saharan Africa," said Andre
Roux, chief executive of the 29-year-old Johannesburg-based
Roux said Ethos had managed to attract a wider spread of
investors than in previous rounds of fundraising, drawing Asian
pension and sovereign wealth funds for the first time, as well
as investors from Europe, North America, the Middle East and
"Previously a large portion of our international fund money
came from North America," he said. "It's now much more evenly
spread. Asia is now an important contributor to our funds where
previously we had no contributions from Asia."
Private equity investors are increasingly targeting
sub-Saharan Africa, home to some of the world's fastest growing
economies and an expanding middle class.
The region is projected to grow at an average rate of 5
percent from 2013-2015, according to the World Bank. Excluding
South Africa, growth is expected to average 6 percent over the
In 2011, Helios Investment Partners raised the largest
Africa-focused fund, totalling $900 million, after attracting
more than $1 billion in orders.
Last year, Brazilian bank BTG Pactual Group
announced plans to raise $1 billion for what will be Africa's
biggest private equity fund, with a focus on the infrastructure
and energy sectors.
U.S. private equity firm Carlyle Group completed its
first African deal in November, paying $210 million for a stake
in Tanzania-based agribusiness Export Trading Group along with
two other investors.
The Ethos VI fund has already made two South African
investments, in companies in the construction and corporate
Ethos typically invests in medium-sized to large businesses
with an enterprise value of between $100 million and $450
million, Roux said.
Outside South Africa, Roux said Ethos saw potential in west
African oil producers Nigeria and Ghana and in east Africa,
where Kenya and Uganda have discovered oil.
"We think that's going to be a huge stimulus to that part of
the world as those oil finds are developed," he said.