Mar 29 2014
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Sidra Capital leads GCC investors into Africa
Sidra Capital and its Geneva-based partner INOKS Capital recently concluded on behalf of a consortium of GCC investors, two Shariah-compliant convertible investment transactions in excess of SR140 million in the agriculture and real estate sectors of Cote d'Ivoire and Ghana.
The convertible investment strategy is one of key investment strategies developed by INOKS Capital and Sidra Capital and it dovetails the Sidra Ancile Structured Trade Investment strategy that they jointly launched in 2012.
This latest investment strategy adds on to Sidra's array of alternative investment strategies while entrenching its position in becoming a leading alternative investment house in Saudi Arabia.
In Cote d'Ivoire, the consortium is participating in a regulated government-sponsored social housing scheme to provide affordable housing for the growing middle class in its capital Abidjan.
This public private partnership (PPP) aims to execute the government comprehensive blue-print to address the issue of acute undersupply of housing by providing the right legislative framework for the private sector developers to deliver 60,000 units over the next 5 years.
To date, OPES Holding SA, the beneficiary of the investment, has secured offtake for approximately 7,200 units and well in excess of its Phase 1 delivery target of 1,500 units.
OPES is one of five authorized developers selected to participate in this program.
Hani Baothman, CEO of Sidra Capital , commented: "GCC investors are familiar with real estate investment, and when they see a good deal it is difficult for them to decline. The business model of our partner OPES is very simple: build units once secure offtakes have been signed and a down payment has been made. This significantly reduce the risk of non-payment by the buyer as the buyer is not an individual"
As for Ghana, the consortium is investing in an integrated agriculture commodity supply chain player, RMG Concept Ltd. (RMG), with activities in Cote d'Ivoire, Ghana, Burkina Faso, Liberia and Mali. Over the last five years, RMG has been the beneficiary of various trade finance strategies from leading international banks and funds. This has enabled the management to significantly grow its operations in the region and today is one of the market leaders with revenues in excess of $100 million.
"This is a good transaction for our investors as the timing of the investment could not have been any better. RMG through its various subsidiaries has developed into a major regional commodity supply chain player from its origin as a supplier of fertilizers to cotton farmers and can grow even further with the support of investors who share the same vision as the management. We expect this investment to introduce us to other sub-sectors of the agribusiness sector in search of value," Baothman added.
RMG's clients include first class international commodity trade houses such as Olam, Singapore and Ecom, Switzerland. In addition to the support procured from mainstream trade finance banks, RMG has also been the target of private equity investors globally. However, with this strategy in place, the consortium has secured the priority to convert the investment into equity investment in RMG.
"GCC investors have many preconceived negative ideas about investing in Africa and during our trips we were pleasantly surprised to see many Western and Asian investors flocking the region. We have not been true to our trading roots. Over the last few years, we have seen substantial FDI amounts flowing into Sub-Sahara with the Western African countries being the largest beneficiaries. Our partner INOKS Capital has been primarily operating in West Africa for the last 7 years and have a stellar track record when it comes to performance and delinquencies. This has given us the confidence to work with them in Africa and bring such opportunities to our region," added Baothman.
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