INVESTEC Asset Management’s Africa-focused private equity fund has acquired a significant minority shareholding in technology services firm wiGroup for an undisclosed sum.
The plan is to help the firm grow and sell more software to corporate clients and mobile money issuers in Africa.
wiGroup delivers solutions that enable corporates to accept mobile transactions. It helps firms move their loyalty cards to mobile applications. A total in-store mobile transaction value of more than R4bn has been processed securely to date.
“We want to capitalise on its presence and the position it has built in SA. The second aspect is to help the business win more customers and get business outside SA,” Investec’s private equity investment principal William Alexander said.
It is in a partnership as well with Interswitch, an electronic transaction switching and payment processing firm in Nigeria. The Investec Africa Private Equity Fund II has also invested in telecoms towers business IHS Africa in Nigeria and IDM, a debt management company in SA.
The fund is not closed to investors, though. Mr Alexander could not yet disclose how much it planned to raise, but the amount would be higher than that of Investec Africa Private Equity Fund I, which had total commitments of about $155m.
His fund was flexible and held an investment for four to six years. In the Investec Africa Private Equity Fund I investments were made in Seven Energy in 2008, SA Taxi Finance in 2011, and OK Zimbabwe in 2010.
Southern Africa Venture Capital and Private Equity Association (Savca) CEO Erika van der Merwe said although there was activity in the sector, institutional investors were not allocating much to it.
“They could do more for private equity. Given the returns performance from the asset class and the diversification benefit it provides in an institutional portfolio, this may be a missed opportunity,” she said.
A survey of returns performance in the industry by RisCura and Savca shows that over the 10 years to the first quarter of 2015, returns in private equity were at 20.5% compared to 18.1% on the all share index.
“It (private equity) is a good source of foreign direct investment into the local market. And it’s definitely not just about the private equity fund manager handing money over to the business in which it invests; it also brings improved governance, strategic guidance and makes businesses more sustainable.”