Harith General Partners has become one of the first successful investors in Africa’s digital infrastructure space, which includes exiting Nigeria’s MainOne at $320 million. With industry players increasingly pouring money into this enticing space, Harith’s Chief Executive Officer Sipho Makhubela shares his insights on the deal.
For defined-period private equity funds and their managers, the coming of the day of exit from an investment is as certain an event as you can get. And yet, navigating the exit door may not always be straightforward, or easily accessible. Plus, the returns from any transaction concluded at the end of the investment period are far from guaranteed. This is particularly true in an environment that is notoriously challenging for private equity players on the continent.
The biggest headache is liquidity. The reasons for this ranges from there being few stock exchanges that present opportunities for attractive initial public offerings, to a limited buyer pool of buyers. Currency risks, along with other regulatory and economic concerns, are also cited as significant deterrents for many potential buyers from outside the continent. Add to this matrix the black-swan event that was the coronavirus disease (Covid-19) pandemic and its lingering effects on the global and continental economies.
It was against these headwinds that we proved our mettle by successfully completing one of the continent’s most notable exits in recent years. In April 2022, Harith sold its stake in MainOne to Equinix, the world’s largest digital infrastructure company, also listed on Nasdaq.
We had invested in MainOne through the Pan African Infrastructure Development Fund (PAIDF), our maiden closed-end vehicle closed at $630 million in 2009. We also manage PAIDF II, a $435 million top-up vehicle.
During Harith’s holding period, the company expanded its footprint regionally across West Africa, which included obtaining a license to operate in Côte d’Ivoire, after initially focusing on Nigeria. MainOne also partnered with Facebook, a move that would see it start to offer broadband internet services across Edo and Ogun States in Nigeria.
Harith’s investment in MainOne fits-in with our lodestar and founding vision of mobilising African capital to unlock the continent’s economic potential through key infrastructure investments in energy, transportation, and Information and Communication Technology (ICT).
It also attests to the soundness of Harith’s investment philosophy, which seeks to ensure that investments are made in well-structured assets across the continent. The philosophy also focuses on mitigating underlying risks. Our value-creation is hard-wired into investments through deep sectoral and territorial knowledge, insights, and experience.
At the best of times, concluding a successful exit transaction with a partner that will take the investee asset further, while also yielding a good return for investors and leaving an enduring societal legacy, is a remarkable achievement. Achieving all this in the current challenging exit environment is a proud testament to the depth of our expertise, how we operate on the continent, our pedigree, and the quality of partnerships we have built on merit.
