- The two entities together manage close to $3 billion in assets
- Harith acquisition will help to expand deals in the continent
South African private equity firm Harith General Partners agreed to buy a 46% stake in larger rival Mergence Investment Managers.
The acquisition will help the two companies deploy their combined 59 billion rand ($3.1 billion) in assets to back infrastructure projects and other investments in Africa, Harith’s Chief Executive Officer Sipho Makhubela said in an interview. Makhubela didn’t disclose financial details of the transaction. Shandurwa Pty Ltd., a wholly women-owned firm, will also buy 5% of Mergence.
“The numbers currently don’t stack up well for Africa when it comes to the investment needed for its growing infrastructure needs,” said Makhubela. “This is why we did this deal, to grow Mergence as a financial services business, with a bias towards infrastructure assets.”
Africa’s infrastructure needs are massive but cash-strapped governments on the continent are constrained in their capacity to finance projects. According to the African Development Bank $170 billion a year is needed to build roads, power plants and ports on the continent where about 600 million people don’t have access to electricity and 800 million people lack basic sanitation.
The deal will help Mergence invest in sectors such as clean energy, water and digital and social infrastructure, said Makhubela, while expanding Mergence’s financial services business to other African countries.
Mergence is an asset manager that focuses on listed and unlisted markets, that include offerings such as equities, infrastructure, debt and private equity funds. Harith — founded in 2006 — has invested in infrastructure projects in eight African countries, including the largest wind farm in Africa, and is in the process of investing in South African Airways.
© Bloomberg