Growth market investor the Abraaj Group has announced it has closed its third dedicated Sub-Saharan Africa private equity fund at US$990 million, and aims to focus on growth investments in businesses supporting the rapidly growing urban consumer class.
Abraaj has 27 investment and operating professionals based in offices in Nairobi, Lagos, Accra and Johannesburg, and has deployed US$3 billion in funds across the continent through 67 investments in nine sectors over the last 10 years.
The Abraaj Africa Fund III (AAF III) received support from a number of global institutional investors, pension funds, sovereign wealth funds and development finance institutions, with 64 per cent of capital coming from European and North American investors.
“Leading African institutions also subscribed for significant allocations to AAF III, further demonstrating the attractiveness and maturity of the growing private equity opportunity in Africa,” the company said.
AAF III will look to invest in well-managed, mid-market leaders in sectors most likely to benefit from demand driven by the rapid expansion of a young, urban, middle class across Sub-Saharan Africa.
“These sectors include consumer goods and services, consumer finance, and resource and infrastructure services in the core geographies of Nigeria, Ghana, Ivory Coast, South Africa and Kenya,” Abraaj said.
Arif Naqvi, founder and group chief executive of the Abraaj Group, said the strong demand for the new fund reflects increasing investor appreciation of “the powerful growth story unfolding across Africa”.
“It is a story driven by rapid urbanisation and favourable demographics that are fuelling consumption across multiple sectors from an expanding, young middle class,” he said.
“Abraaj’s longstanding presence on the ground, with seasoned local investment teams in four key Sub-Saharan cities, coupled with our deep global experience of value creation in growth markets, puts us in a unique position to identify high-potential partner companies that can become regional champions in their industries.”
The fund is looking to partner with companies with the capability to create value through a combination of organic expansion, add-on acquisitions, strategic repositioning and consolidation strategies. In this way, Abraaj hopes to help local African businesses “become regional champions”.
“Abraaj’s network of offices and experience with executing successful regional growth plans for several of its African portfolio businesses provides it with the ideal platform to execute these strategies,” the company said.