The Rohatyn Group (TRG) has acquired Ethos Private Equity – marking its first significant foray into the African continent. The deal has consolidated about 400 LPs, across the two firms – and brought the combined assets under management to approximately $8 billion.
Financial details of the acquisition have not been disclosed – with the deal subject to regulatory approval.
The acquisition sees the US giant set up an African investment arm, after primarily focusing its capital spread across US Latin America, Europe, the Middle East, India, Southeast Asia and Oceania. TRG was set up in 2002, and invests across the private equity, private credit and real assets strategies – with $6 billion in AUM as of 2022.
Although this is its first significant foray into Africa, TRG has historically opportunistically invested in African deals, including the backing of Egypt-based healthcare products manufacturer Amoun Pharmaceuticals. TRG exited the deal alongside Capital Group and Concord International in 2015 – in a deal valued at approximately $800 million.
TRG was also a previous investor in Union Bank of Nigeria (UBN) – the financial services company that the African Capital Alliance (ACA) investment consortium exited earlier in 2022.
Ethos is being backed growth prospects, with Africa being a diverse investment destination with significant potential opportunities in private markets, real assets, and public markets – according to TRG. Ethos has delivered over 150 investments across Africa since inception. TRG is also acquiring Ethos on synergies.
“The philosophical and cultural similarities of TRG and Ethos were apparent from the start. We share a belief that multiple thematic cross currents — such as private credit, renewable energy, digitalization, and agriculture, among others — will anchor future investment priorities for investors,’’ said Nicolas Rohatyn, founder and chief executive officer at TRG. ‘’Our combined firm, with almost $8 billion in AUM, almost 400 institutional LPs, and the ability to offer solutions for de novo investing, as well as ongoing GP consolidations and fund restructurings, will occupy a unique position in our industry.”
As part of the deal, TRG has taken over all the Ethos funds and asset management mandates – including the Brait and Ninety One deals. The TRG acquisition brings to completion the consolidation path that Ethos trodden, by taking over mandates from key competitors in the market
Ethos Private solidified its footing in the African private equity space with the take over of Ninety One Africa-focused private equity funds in 2020.
The GP took over the asset management of two funds, the larger of which is Investec Africa Private Equity Fund 2 (IAPEF 2), closed at $295 million in 2016.
Ethos also took over the management of Ninety Ones’ maiden Africa-focused private equity fund, Investec Africa Private Equity Fund, closed at $155 million in 2010.
As part of the deal, Ninety One was to continue to control and oversee the portfolio, while Ethos took over the day-to-day management of the assets.
Ninety One let go of the funds only less than year after it spun out of Investec, which had evolved into a listed business.
Also as part of the deal, TRG is also inheriting the Brait mandate that Ethos was handed in 2019. Ethos took over the investment advisory of Brait in 2019, following its deal to invest R1.35 billion in the company.
Ethos was mandated with driving Brait’s revised investment strategy, which included exiting portfolio assets – and returning capital to investors in the five years to 2024.
The R1.35 billion Ethos deal was part of an equity capital raise that targeted R5.6 billion. The equity capital raise included a R5.25 billion rights issue, to refinance existing debt.
Ethos had invested in Brait through its latest buyout fund and its listed private equity platform.
The investor injected R750 million through Ethos Fund VII, which has been on the road to raise approximately $540 million (R8 billion) at final close
The remaining R600 million, was channelled through Ethos Capital the listed investment platform it set up in 2016– which was set to be raised via a separate rights issue.
TRG will continue to operate the management and advisory contracts exactly as they have been conducted to date with no change in strategy, according to a company spokesperson.
This includes taking over a 25% stake in Infinite Partners, a recently set up investment firm formed as a spin out of part of the Ethos’ investment team. The new Infinite team is managing the Ethos Mid Market Fund I, closed at R2.5 billion in 2018.
In addition to the mandates, TRG is taking over a number of direct funds including a number that are currently on the fundraising trail.
This includes Ethos Fund VII, sized at R8 billion. The investor is also in the market with Ethos Artificial Intelligence (AI) Fund I, which is targeting R1 billion at final close. The vehicle had a R600 million first close in 2018, raising 60% of the final target size.
Ethos is also on the fundraising trail with Ethos Healthcare Fund I, which is targeting R2 billion at final close. The fund has a hard cap set at R3 billion.
Stuart MacKenzie, current chief executive officer at Ethos, will head the new TRG African arm – and will be responsible for driving the growth strategy. He will be also joining TRG’s executive committee, according to a TRG spokesperson.
MacKenzie took over the Ethos reins from founder André Roux, who stepped down in 2013 to become deputy chairman. The firm now employs 42 people, as of 2022.
Ethos’ recent deals include an investment into Crossfin, a South Africa-based financial services technology company – a deal sealed in 2021. The investor structured the transaction through two funds, the first being Ethos Mid-Market Fund I (EMMF I), closed at R2.5 billion in 2018. The investor also allocated capital through Ethos Artificial Intelligence (AI) Fund I, sized at R1 billion.
Lazard was financial advisor to TRG on the Ethos acquisition.
