Published: May 26, 2011
Kingdom Zephyr hopes its new Lagos office heralds a wave of fresh private equity deals.
Nigeria is on an upward curve. The presidential election in April was hailed as peaceful and fair. The economy, Sub-Saharan Africa’s second largest, is recovering from its dip in 2009: the International Monetary Fund expects Nigeria to be among the world’s 10 fastest-growing economies between 2011 and 2015. Its banking sector has been reformed since institutions were audited in 2009. Oil production hit a record high of 2.5mn barrels a day during 2010. “In terms of political and economic pointers, everything is pointing north,” says Seyi Owodunni, a partner at African private equity firm Kingdom Zephyr.
Small wonder, then, that Owodunni approaches his latest role with such relish. In May, Kingdom Zephyr opened an office in Lagos, Nigeria’s capital, which Owodunni will run. A former chief financial officer of Nigerian telecoms group Starcomms, Owodunni will track down investment opportunities in the telecoms, banking, consumer and natural resources sectors.
Kingdom Zephyr is investing its US$492mn Pan-African Investment Partners II Fund, which it closed in February 2010, attracting investors including the African Development Bank, the European Investment Bank and the International Finance Corporation. The fund has already made investments in the construction, food and real estate sectors across Sub-Saharan Africa. Now, Nigeria presents its next focus.
Capital city
Kingdom Zephyr already has a track record here. Its first fund backed investments in Nigeria’s United Bank for Africa and Ecobank Transnational. “Nigeria has always been one of our forefront geographies,” Owodunni tells EMEA Finance. “It made a lot of sense for us to establish on the ground now.”
That’s because as more private equity players focus on Africa, competition for deals is increasing. In March, for example, US-based Carlyle Group launched a Sub-Saharan Africa Investment Group, with new hires leading the team. “There are many more players in the market than there were five years ago,” Owodunni says. “We’re seeing a revamp in the raising of new Africa-focused funds.”
So itt’s no longer enough for private equity firms to travel to Nigeria when the right transaction appears – Kingdom Zephyr wants to make deals happen on its own terms. “By coming here and being on the ground, we want to establish closer ties with business owners, entrepreneurs and management teams and help nourish those relationships that will deliver deals for us – maybe not immediately, but in the future,” Owodunni says.
That sense of playing the long game is important – it’s early days for Kingdom Zephyr’s Nigerian venture. For now, Owodunni works alone, with the expectation that one or more colleagues will join him in Lagos in the coming months, and he shies from giving a timescale for any deals. “I’ve learned in my short stint in private equity that a deal is never done until it’s done,” he says with a laugh. As competition heats up for private equity player, that sense of humour could be an important attribute.