Why Alternative Investors are bullish about Africa’s Data Center Industry
Why Alternative Investors are bullish about Africa’s Data Center Industry
Plus Ghana’s Sovereign Debt - New twists and turns, IFC's €100 million green loan and more
Good Day,
Your essential financial newsletter for the Africa-focused investment manager and business leader
In today’s newsletter :
Infrastructure: Why Alternative Investors are bullish about Africa’s Data Center Markets
Sovereign Debt: Ghana’s Sovereign Debt - New twists and turns
Deal Roundup: Notable deals for the week
Infrastructure Investment
Why Alternative Investors are bullish about Africa’s Data Center Market.
Data is everything, especially in Africa where its internet economy is growing at a fast rate leading to significant demand for data infrastructure and cloud base services. The nature of the demand cuts across key sectors of the economy such as financial services, healthcare, technology, businesses and government agencies with an expectation that over 75% of companies in these sectors will migrate to the cloud by 2025.
Revenue projections from the African data centre market are expected to grow at a compound annual growth rate of 12% to 2025 and beyond according to the Africa Data Center Association.
Investment in the Africa Data Center markets is growing with major tech companies namely Google, Microsoft and Amazon Web Services (AWS) setting up cloud infrastructure within the South African region.
Investor interests have also increased with Raxio Data Centers’ recent announcement of a $170 sustainability-linked debt facility to accelerate digital transformation in Africa and other M&A and PE activities like :
Equinix's acquisition of MainOne for an enterprise value of US$320M
International Development Finance Corporation (DFC) $83M investment in Africa Data Centers
African Infrastructure Investment Managers’ majority acquisition in Ngoya Etix DC (Ghana) Ltd.
Digital Realty's acquisition of Teraco Data Environments for an enterprise value of $3.5 billion
Investment in the Africa Data Center markets will lead to tremendous growth in internet usage, storage capacity and data requirements which will in turn help businesses, local development companies, telcos, educational institutions and the creative economy to develop tools, offer services, build an efficient information ecosystem and create jobs
Sovereign Debt
Ghana’s Sovereign Debt - New twists and turns.
Ghana needs an urgent resolution to its external debt crisis to unlock the $ 3 billion IMF bailout for the country, but this comes at a price, first the implementation of severe austerity measures and second an agreement with its international creditors, neither of which are easy options, hence recent twists and turns.
The twist and turns
As of September 2022, Ghana’s public debt stood at over 467 billion cedis ($46.7 billion) of which 42% is domestic debt and 13% that held by local commercial banks.
The country’s public debt to GDP rate is fast approaching 100%.
Approximately $13 billion of Ghana’s external debt is held in Eurobonds by leading asset management firms like BlackRock, PIMCO, Neuberger Berman and Abdrn, with 10% of the external debt owned by China.
At the end of 2022, the Ghanaian government suspended payments to service its debts Eurobonds, commercial loans and most bilateral loans citing economic challenges.
The Ghanaian government delegation and IMF representatives have reached a staff-level agreement on economic policies and reforms for a new three-year arrangement under the US$3 billion Extended Credit Facility (ECF).
Key takeaways: Recently, the Ghanaian government and international bondholders made progress by holding formal debt talks after representatives of both sides signed non-disclosure agreements. Without an agreement on the debt restructuring accessing the IMF bailout will be delayed. More urgently, the right reform is needed to restore to ensure economic growth and debt sustainability.
Deals
M & A
Leading European corporate insurance consulting and brokerage The Diot-Siaci Group, and leading investment funds Amethis have signed an agreement to acquire a stake in ASK Gras Savoye Group.
Fundraising
The Nigeria Sovereign Investment Authority (NSIA), Nigeria’s sovereign wealth fund, and global energy and commodities company Vitol has completed a joint venture agreement with an initial US$50 million committed, to invest in a range of carbon avoidance and removals projects.
Private Credit
Pearl Dairy Farms, which manufactures the Lato milk brand has secured a $35m loan that will enable it to fund its expansion in Uganda and Kenya.
Kuramo Capital has taken an extra 24% in Kenya investment and infrastructure company TransCentury via the conversion of part of its shareholder debt to the investment firm.
IFC and Moroccan state-owned phosphate rock miner, phosphoric acid manufacturer and fertilizer producer OCP Group have announced a green loan agreement of €100 million to build the solar plants in the mining towns of Benguerir and Khouribga, home to Morocco's largest phosphate reserves, reduce the company's carbon footprint and help green its fertilizer production.
Private Equity
Kleoss Fund 1 managed by Kleoss Capital has completed a full exit from the South African health and wellness group Real Foods
The IFC is considering an investment of up to $60 million into Apis Growth Markets Fund III SCSp (the “Fund” or “AGF III”), a $500 million private equity fund making growth-stage investments in companies operating at the intersection of financial services and technology in South Asia, Southeast Asia and Africa
The European Bank for Reconstruction and Development (EBRD) has announced a proposed $20 million equity investment of USD 20 million in favour of Tanmiya Capital Ventures Fund II Cooperative (the "Fund").
Projects and Infrastructure :
The Spanish government has approved a EUR 5 million loan to help Morocco construct two water treatment plants
The Nigerian federal government has approved contracts worth approx. $91 million) for the immediate repairs of the Third Mainland Bridge in Lagos, Enugu-Anambra Road.
Kenya is seeking a $283 million loan from China to expand Kiambu Road into a dual carriageway to ease the heavy traffic congestion along the 25-kilometre stretch currently dominated by car yards.
Venture Capital Deals :
South African agri-tech start-up FarmTrace, a cloud-based farm management tool that offers a diverse range of tools to help farmers manage their operations, has raised an undisclosed amount of funding to help it expand operations.
Banking Update:
Tanzania’s CRDB Bank Group has reported an 875 % rise in profit over the last five years due to a candid implementation of its five-year strategy
Uganda’s Post Bank has retained the $4 million it reported in profits for the period ended December 2022 as part of recapitalisation for the fully government-owned bank.
Ecobank Malawi has more than doubled its after-tax profit to approx. $18 million in the year ended 31 December 2022 from the previous year’s $8 million, despite the challenging economic environment with high inflation.
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