Dubai-based Abraaj raises $1.3bn for African funds

Abraaj Group has raised about US$1.3 billion for two funds investing in Africa to tap into the continent’s economic growth, a person familiar with the deal said.

One fund focusing on Sub-Saharan Africa will be about $1bn, while the second North African fund will be more than $300 million, the source said.

“They have exceed their targets for the funds,” the source said.

Abraaj declined to comment.

The IMF is projecting regional GDP growth in Sub-Saharan Africa to rise to 5.75 per cent this year from 5 per cent last year thanks to infrastructure investment, expanding services, and robust agricultural production.

Abraaj, with assets of about $7.5bn, has been boosting its reach with investments in Sub-Saharan Africa and North Africa, particularly in Egypt.

The Dubai-based buyout firm has invested more than $2.6bn in Africa over the past two decades through 80 investments in the continent.

Deal activity on the continent nearly doubled last year to $8.1bn – the second highest on record – compared with $4.3bn in 2013, according to the London-based African Private Equity and Venture Capital Association. Since 2007, 983 transactions have been completed with a total value of $34.5bn.

Private equity activity is centred around fast-moving consumer goods sectors, infrastructure, real estate and energy, with Sub-Sahara Africa, excluding South Africa, being the focus of investors, according to the association. About $4.1bn was raised last year in African funds, boosting the total of fundraising since 2007 to $22bn.

Carlyle Group, the US-based private equity firm last year closed a $698m Sub-Saharan fund, almost $200m above its initial target of $500m. Other private equity players in Africa include London-based Helios Investment Partners, which closed this year a $1.1bn Africa-focused fund, its third for the continent. The private equity firm KKR last year made its first investment in Africa, funnelling $200m into Ethiopia’s rose grower and distributor Afriflora.

Abraaj this month sold its stake in Ecco Outsourcing, one of Egypt’s leading business process outsourcing and contact centre outsourcing, to Saham Services, a unit of Morocco’s Saham Group.

Last year it sold a 21 per cent stake in the Egyptian private sector healthcare firm Integrated Diagnostics Holdings to the London-based private equity firm Actis.

Abraaj owns stakes in other high-profile firms including Egypt’s Orascom Construction industries, the Sharjah-based low-cost carrier Air Arabia and supermarket chain Spinneys.

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