Fundraising

Kingdom Zephyr inks third deal in a month

A $20m investment in South African company Buildworks will benefit from the ongoing development of Africa’s electrical power infrastructure. The company could expand into the Middle East, according to Kingdom Zephyr partner Panos Voutyritsas.

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Kingdom Zephyr Africa Management, a joint venture between the US-based private equity firm Zephyr Management and Prince Alwaleed bin Talal bin Abdulaziz Alsaud of Saudi Arabia, has made its third investment in a month. It has injected $20 million into Johannesburg-based Buildworks for a 30 percent stake.

“The mutual goal is to expand Buildworks’ business lines within the power sector, enhance its footprint on the African continent, and explore potential growth opportunities in the Middle East through our extensive relationships in that region,” said Panos Voutyritsas, a partner at Kingdom Zephyr.

Electricity infrastructure: ongoing investment

The business, which has historically supplied heavy building materials to the construction industry, has used the bulk of the Kingdom Zephyr investment as acquisition capital to buy Consolidated Power Projects – or “Conco” – which builds electrical substations for the power industry.

Voutyritsas said the Conco acquisition, with its exposure to infrastructure growth, was a vital element of the deal.

“Residential construction companies have taken a beating,” he said in an interview, “but companies benefiting from infrastructure growth have fared better and we expect them to continue to do so. We see growth in electrical infrastructure for the next 10 to 20 years.” He added that there were not many opportunities for private equity funds to gain exposure to infrastructure growth, because of the long investment timelines involved.

This is the third deal from Pan African Investment Partners II (PAIP II) and the first in a South African company. The fund is still raising commitments with a target total of up to $500 million.

Last week Kingdom Zephyr sealed the first two deals from PAIP II; it took minority stakes in Mixta Africa, a Spanish affordable housing developer operating predominantly in the African low to middle income residential real estate sector, and Thunnus Overseas Group, a producer and distributer of canned tuna with operations in Cote d’Ivoire, Madagascar and France.