A South African private equity firm, Harith General Partners, has announced its intention to acquire a 46% share in the larger rival, Mergence Investment Managers.
This purchase will enable the two companies to utilize their combined assets of R59 billion ($3.1 billion) for supporting infrastructure projects and various investments in Africa. Sipho Makhubela, the CEO of Harith, disclosed this plan in an interview with Bloomberg, but specific financial terms of the transaction were not revealed. Moreover, Shandurwa, a wholly women-owned firm, will also acquire a 5% stake in 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 faces a significant infrastructure deficit, with governments struggling to secure funds for essential projects. The African Development Bank estimates that an annual investment of $170 billion is required to develop infrastructure like roads, power plants, and ports on the continent. This need is particularly urgent as around 600 million people lack access to electricity, and 800 million people lack basic sanitation.
The collaboration between Mergence and Harith will enable Mergence to invest in crucial sectors such as clean energy, water, and digital and social infrastructure. Simultaneously, it will support the expansion of Mergence’s financial services business into other African nations.
Mergence is an asset management firm with focus on both listed and unlisted markets, offering services like equities, infrastructure, debt, and private equity funds.
On the other hand, Harith, established in 2006, has a track record of investing in infrastructure projects across eight African countries, including the largest wind farm on the continent, and it is in the process of investing in South African Airways.
“The continent’s urbanization, growing and youthful population, mobility, natural resources, telecommunication and digital advances, as well as its intra-continental and regional trade will spur significant economic growth,” Makhubela said. “Investing in the infrastructure to enable it all makes good business sense.”