How firms in Côte d'Ivoire are securing capital

 

As Côte d’Ivoire seeks to consolidate its position as the leading financial centre in West Africa, the environment for private equity funds has been improving in recent years. Not only is the country’s economic capital Abidjan home to the Bourse Régionale des Valeurs Mobilières (BRVM), the regional exchange for the eight countries of UEMOA, but Côte d’Ivoire’s economic rebound from a decade of civil unrest has also positioned its economy as one of the fastest-growing in the world.

Funds

These conditions have made Côte d’Ivoire an attractive market for private equity funds looking for opportunities on the continent. Between 2008 and 2017 the number of private equity funds operating in the country expanded from two to 15, showcasing the strong appeal of many sectors of the Ivorian economy. Key drivers have included economic opportunity and the growing interaction between businesses and the regional capital market – which provides a clear path for funds looking to exit investments by listing on the exchange. According to a report by the African Private Equity and Venture Capital Association, the consumer staples and industrials sectors accounted for 24% and 20%, respectively, of private equity deals in Côte d’Ivoire between 2011 and 2016. The health care and financial services segments have also been targeted by private equity investors, each of which attracted 12%.

Operational Impact

The growth of private equity funds has allowed for fresh financing to support the development of local companies and projects. In late 2018 Tunisia-based, pan-African private equity firm Africinvest invested €12.2m in Ivorian road transport company Groupe Centaures. The company transports agricultural goods, oil and containerised freight across Côte d’Ivoire and neighbouring countries, and offers basic logistics services. The financing is expected to be used to expand the company’s operational infrastructure and fleet. Another private equity player with a continent-wide presence that has focused on Ivorian businesses in recent years is Amethis Finance. In 2015 the firm joined forces with the National Bank of Canada to acquire a 26.2% stake in NSIA Participations – which is headquartered in Abidjan, operates in over 12 countries, and controls NSIA Group’s insurance and banking operations. Also in 2015, Amethis bought an equity stake in Novamed, a private operator of medical facilities in Côte d’Ivoire. The health care operator has since begun to expand elsewhere across the region, following its acquisition of a private hospital in Burkina Faso in September 2017. By the end of that year Amethis had invested €17.6m into the Ivorian health care provider. The private equity firm also invested in the retail and distribution sector in 2017 through its injection of capital into Afriwara, a producer of agro-industrial goods that was founded in Côte d’Ivoire and is currently emerging as a regional player.

Private equity player Adenia Partners has similarly been channelling resources into Côte d’Ivoire and the regional economy in recent years. In 2012 the firm invested in Syrse, a regional IT provider that manages electronic payment systems. A few years later, in 2016, the player purchased a majority stake in Ademat, an Ivorian provider of generators and other energy solutions. More recently, in 2018 Adenia Partners bought a controlling stake in Kanu Equipment, a heavy equipment distributor. Such deals provide significant volumes of capital that can enable businesses to scale up their activities, and equity fund activity is set to be reflected on the BRVM in the longer term as private equity investors bring new companies to the regional exchange. The impact is likely to be felt more acutely by businesses operating within the BRVM’s small and medium-sized enterprise compartment – which was launched towards the end of 2017. In a further effort to develop the segment, in September 2018 the BRVM inked a partnership deal with private equity firm Enko Capital to establish a fund valued at almost CFA50bn ($86m) for investment into companies that have signalled their intention to list on the regional exchange.

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The Report: Cote d'Ivoire 2020

Capital Markets chapter from The Report: Cote d'Ivoire 2020

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