KENYA – The International Finance Corporation (IFC) is set to invest US$50 million (Sh5 billion) in private equity firm Helios Investment Partners which is raising funds for new investments across Africa.
Private Equity (PE) firms typically raise funds for investments which they hold for five to seven years, after which they sell their stakes and return the capital to their investors.
Helios is seeking to raise a total of US$1.25 billion (Sh125 billion) by September, targeting to deploy the capital in medium to large companies in which it will take minority to controlling stakes, reports Business Daily.
The equity firm, which has teams in London, Lagos and Nairobi, will invest between US$30 million (Sh3 billion) and US$200 million (Sh20 billion) per transaction.
“The proposed project is for an equity investment of $50 million, not to exceed 20 percent of total committed capital. The target size of the fund is $1.25 billion in commitments,” International Finance Corporation said in its investment disclosures.
The institutional investor added that the project is expected to increase competition in Africa’s PE market by “demonstrating the viability of investments in a region suffering from a lack of investor confidence.”
The new capital could see Helios expand its investments in Kenya where its portfolio companies include Africa Oil, Acorn Group and Telkom Kenya.
Among the major most lucrative investments by PE was in the purchase of a 24.9 percent stake in Equity Group for US$110 million (Sh11 billion) in 2007.
The firm later exited in 2015 with a profit of more than US$400 million (Sh40 billion) including dividends.
Helios has invested US$3.63 billion (Sh363 billion) in African businesses over the past 13 years.
IFC has consistently backed Helios, having participated in the PE firm’s earlier capital calls.
“IFC’s continued commitment to the fund manager in Helios IV through US$50 million of patient capital will assist the large-cap growth fund in achieving its first close by September 2019 and ultimately its target size of US$1.25 billion,” the institutional investor said.
Besides the capital injection, Helios will also benefit from IFC’s knowledge, portfolio and networks in Africa.
The PE firm is expected to add value in the companies it is investing in by focusing on leadership, operational excellence, governance and strategy and execution.