Atta Africa Financial Update

Key commercial and political activity in Africa for private equity investors by DCE Partners, UK Private Equity advisors to Atta

Executive summary:

Insurance penetration rates in Nigeria are yet to break the 1% mark, whereas other African developing countries such as Kenya and South Africa record 3.2% and 14.3% respectively. Driven by regulatory obligations, Nigeria writes the largest amount of premiums in sub-Saharan Africa after South Africa, yet it is estimated that there are less than 1.5m voluntary policies in the country of 180m. The primary reason for this lack of depth is poor financial literacy, even amongst an increasingly banked and urbanised population; over 62% of the adult population was thought to be saving in some way in 2012, 77% of which were doing so to cater for emergency expenditure – which could be covered by insurance products.

The sector is also characterised by high fragmentation, with 60 insurers in the market - half are P&C insurers and over a third are listed. Industry regulators have successfully pushed for consolidation in the past, with the number of companies being as high as 140 in 1994 and hitting a low of 49 in 2007. Despite this, stubborn profitability has restrained M&A activity and concentration ratios are likely to remain low for the foreseeable future. 

M-KOPA raises US$19m

 
  • M-KOPA Solar, a pay-as-you-go rooftop solar provider has secured US$19 million from a consortium of investors led by Generation Investment Management
  • Generation Investment Management, a fund founded by former United States Vice President Al Gore and David Blood; Richard Branson and AOL’s Steve and Jean Case are also among the new investors in the round
  • The company has connected more than 280,000 households in Kenya, Uganda and Tanzania to solar power and is adding an additional 500 homes per day

Old Mutual PE to acquire 70% of MoreCorp for R300m (US$21m)

 
  • Old Mutual Private Equity has acquired a 70% stake in MoreCorp, a South African Golf and Cycling retailer
  • The transaction is being made through the private equity arm’s R4 billion (US$275m) Fund IV
  • MoreCorp started in 1976 with the launch of The Pro Shop business, which has since been built into the largest retail player in the golf sector