Ashburton seeks $85m for African secondaries – exclusive

The firm is targeting blue-chip buyout funds in South Africa and the sub-Saharan region, with a first close expected in June.

Ashburton Investments, a South African investment manager, is seeking 1 billion rand ($85 million; €68 million) to acquire African fund stakes, Secondaries Investor has learned.

Ashburton Private Equity Fund II has a 35 percent allocation to sub-Saharan African assets outside South Africa and is likely to be underweight given the relative lack of opportunities, according to a source familiar with the fund. Fund II has a minimum investment of 10 million rand, compared with an average of 50 million rand for primary fund investments.

The fund, whose launch was announced in February with an unspecified target, will invest mainly in blue-chip, late-stage buyout funds as well as opportunistic co-investments. It is seeking double-digit returns and is set to hit a first close in June.

The firm declined to comment on fundraising.

Ashburton’s 2014-vintage Ashburton Private Equity Fund I had target allocations split equally between primaries, secondaries and co-investments. The fund ended up being heavily overweight to secondaries, which encouraged the creation of a dedicated secondaries follow-up, Secondaries Investor understands.

That fund is nearly 90 percent deployed across six fund managers and 27 portfolio companies.

Johannesburg-headquartered Ashburton had 140 billion rand in assets under management as of the end of 2016, according to its website. It is a subsidiary of FirstRand Group, one of South Africa’s largest financial services conglomerates.

In March 2016, then-head of Credit Suisse’s secondaries advisory team Mark McDonald and Henry Watson, an associate in the private funds group, wrote that Africa was a good market for secondaries investors due to the lack of competition.

“Given that the majority of the money invested in African private equity comes from experienced institutional investors that have been involved in the asset class since the 1990s and are au fait with secondaries processes, the secondaries market in Africa should develop much more quickly than it did in North America and Europe,” they added.