VENTURES AFRICA – South Africa’s Convergence Partners has launched a $500 million African fund to focus on investments in the information and communication technology sectors, with an initial $35 million equity investment by the International Finance Corporation (IFC), Reuters has reported.
According to the IFC, information and communication technology growth has been dynamic when compared to other forms of infrastructure across the fast-growing continent although there are still visible hindrances for private sector development.
Chairman of the investment group, Andile Ngcaba said he expects an initial $120-$130 million of the Convergence Partners Communications Infrastructure Fund within two months. He affirmed that all is set for the launch of the Fund and also hinted that the Convergence had been in talks with development finance institutions and banks in the last two years for the fund.
The European Investment Bank lists the Fund on its website as a project under appraisal for a $25 million equity injection.
According to Ngcaba, most of the investment would be in companies working on next-generation infrastructure projects to provide high-volume data services.
He said exit would not be difficult given the high investment interest in Africa
“The nature of M&A activity we see is quite dynamic. One does not even see a 10-year horizon in some of them, to be honest with you,” Ngcaba said.
Johannesburg-based Convergence has a deal pipeline of $2 billion and has already invested in about 20 telecommunications, media and technology sector firms in Africa through its “Portfolio I” fund.
The IFC is expecting a return of at least 25 percent from its investment, said Saleem Karimjee, a senior manager for the Southern Africa region. According to karimjee, the IFC expects to invest $3.5 billion in sub-Saharan Africa in the fiscal year ending this month.
The institution invests in developing the private sector in emerging economies, provides loans, equity investments and advisory services to companies.
It made a 170 million rand equity investment in South African financial services company Assupol this month.