A new private equity firm based in Mauritius, Ascent Capital, is looking forward to financing local businesses including start-ups in Ethiopia.
The company on Friday officially opened its office in Addis Ababa in Abyssinia Mall near Bole Medhanialem Church. Lucas Kranck, managing partner, told Reporters that Ascent Capital has raised USD 50 million to be invested in Uganda, Kenya and Ethiopia. Kranck, one of the founders of Ascent, said his company is committed to invest 20 million dollars in Ethiopia over the next three years. The amount could be raised ten times in three years’ time.
The fund is based in Mauritius and has offices in Ethiopia, Uganda and Kenya. The fund will invest in mid-size companies with a minimum revenue of USD two million. “This could go as high as USD 10 million. We will have a ten-year lifetime to exist,” Kranck said. The fund’s life is ten years with a possible extension of two. The company hopes to repay the money to its investors within ten years’ time and exit from business.
“It is equity capital; it is not debt. We share the risk and the reward. We invest between USD 2-5 million per company. If everything goes well, which we hope it will, then we share the reward but if things do not go well we share the risk as well. And, of course, we target good dynamic Ethiopian entrepreneurs and there are many of them in this country,” Kranck said.
Michael Mebaselassie, principal and country director of Ascent Capital, said that the fast economic growth, political stability and huge population make Ethiopia attractive for investment. “Ethiopia has been registering a dramatic economic growth in the past years and there are attractive and promising companies to work with,” Michael said.
Ascent is interested in investing in local manufacturing companies. According to Michael, Ascent is interested in financing manufacturing companies engaged in the production of fast-moving consumer goods. “We are mainly interested in manufacturing companies whose products could be distributed to the majority of the population. We are trying to identify promising companies. We want to maintain strong relationship. It is a long-term commitment. We are not here to fly in and out,” he said.
Ascent is interested in agro processing companies. Kranck said his company is interested in investing in agro processing companies such as dairy farms, juice makers and slaughter houses. The company also wants to get involved in the medical service sector including hospitals and medical laboratories. Ascent has already partnered with a medical laboratory in Addis Ababa called International Clinical Laboratory (ICL).
According to Kranck, it takes three to six months to get to know a business and invest. “It is like a marriage you spend a little time dating before getting married,” Kranck said.
Ascent needs a controlling stake in the company in which it will invest. Michael told The Reporter that his company needs to have 35-40 percent stake in the company it is going to invest in. “This is subject to negotiation,” he added.
Officials of Ascent called on Ethiopian enterprises to come forward and work together. “We encourage Ethiopian entrepreneurs to reach us. Private equity is quite new in Ethiopia. But in the early stage for companies that do not have access to bank financing this is a good opportunity. Let them come to us and discuss things. Once you have the equity capital on the balance sheet then you can reach out to the banks and get more financing. So we encourage people to come and talk to our Ethiopian staff,” Kranck told The Reporter.
Ascent Capital was established two years ago and got commitment for the fund a year ago. The company has 25 shareholders including Norwegian Fund (Norfund), Austrian government fund (OeEB), , European families and East African institutions, such as pension funds and insurance companies. With ten million dollars Norfund is the largest investor to be followed by OeEB with five million dollars investment. Ascent is the second private equity fund to operate in Ethiopia next to SGI.
[TheReporterEthiopia]
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