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South African investment manager Sango Capital acquired equity assets valued at $120 million from a non-African investor that held interests in multiple African investment funds but is now exiting the continent as part of a rebalance of its global portfolio, Sango’s co-founder and partner Richard Okello told Semafor. It is the first in what he said will be a number of deals this year as Africa’s secondaries market gradually takes off.
The acquisition was completed this month at a price below the assets’ value, Okello said, and Sango financed the deal by using both its own capital and fresh funding raised from commercial investors. The transaction will see the firm take over the exiting investor’s stakes in four funds that had made about 30 investments in companies that are operating in 14 African countries, the company said. Sango did not disclose the name of the selling firm, citing confidentiality agreements.
The deal “signals to the rest of the world that large-ticket secondaries transactions are feasible in Africa,” and provides evidence that global investors can make money on their multimillion-dollar bets in Africa, Okello said. Sango is pursuing other deals that will be “two to three times” what they have done this year and involve assets with net value of at least $200 million, he said.
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In Africa, the secondaries market — where investors trade equity stakes held in investment funds from one another — is a nascent one that consists of only a small pool of international buyers and local players, the New York-based Global Private Capital Association trade group said in a report last year.
Secondaries deal activity in Africa has been constrained by the dominance of development finance institutions — who have been historically unwilling to sell their stakes — in the capital base of African funds. But that trend has shown its first sign of potential change, GPCA said, following a series of fund equity stake sales by the UK’s British International Investment in February 2024.
Sango wants to carve out a leading position in Africa’s secondaries market, on the belief that the space is primed for a boom in the near future, Okello said. Founded in 2011, the firm did its first secondaries transactions in Africa five years later, he said. Last year, Sango became a majority holder in Synergy Private Equity Fund II, a $250 million fund that both BII and the European Investment Bank backed in 2018 to invest in businesses in Ghana, Liberia, Nigeria, and Sierra Leone.
Notable
- Secondary deals in Africa’s private equity sector have grown from making up about 15% of exits to nearly a third within the past decade, Boston Consulting Group said in a report last year.