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Private Equity to provide local investors with better opportunities

Private Equity to provide local investors with better opportunities

The implementation of new regulations requiring institutional investors to invest a minimum percentage of their assets into unlisted assets in Namibia, is set to provide a significant boost to private equity as well as benefiting investors and the local economy as a whole.
This is according to Erika van der Merwe, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), who spoke at a SAVCA event held in Windhoek this week, themed around the changing regulatory environment and its impact on local investors.
Van der Merwe said that, while research points to significant fundraising success for private equity funds in sub-Saharan Africa, with deal-flow picking up as a result, the private equity market in Namibia is relatively untapped.
“The new regulations will now provide Namibian long-term insurance companies and pension funds with the incentive to take advantage of this still-underutilised alternative asset class, ” she said.
Daudi Mtonga, Director at the private equity firm VPB and a SAVCA member, explained that the new regulations prescribe that long-term insurance companies and pension funds must now invest a minimum of 1,75% of their market value domestically into unlisted investments, with a maximum investment of 3,5%. This is a new asset class introduced by Regulations 28 and 29, since exposure to this asset class was not previously regulated. Some pension funds nevertheless had direct or indirect exposure to this alternative asset class.
Mtonga said that these new regulations provide a framework for the regulatory authority to regulate the unlisted investment asset class.
“This gives investors comfort that the capital allocated will be under the Regulator’s supervision. Furthermore, the regulation formally defines the nature of the asset class and creates appropriate benchmarks for fund management responsibilities in the market place,” he added.
He said that these regulations also form part of the government’s efforts to curb the outflow of capital and provide access to capital for domestic investment opportunities, which currently struggle to get access to funding – be it risk capital or debt funding.
Van der Merwe is of the opinion that the new regulatory regime will provide an opportunity to increase economic activity in the economy by channelling institutional capital into the unlisted private company market.
Meanwhile, as a result of the change in regulation, the industry has seen a number of Special Purpose Vehicles (SPVs) set up as private equity funds with related fund management companies, and these managers are in the process of raising capital.
According to the Namibia Financial Institutions Supervisory Authority (NAMFISA) 2015 Annual Report, it is estimated that close to N$3 billion will be allocated to this new asset class. The market expects the allocation by 31 December 2015.
Mtonga said he expects that the asset class will offer life-giving opportunities for investors in the coming years.
“The private business market represents the largest economic activity in the region, but in many markets, formal channels for the flow of capital to fund these activities are still limited. There definitely is a growing requirement for growth capital, with demand currently exceeding supply,” he said.

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Following reverse listing, public can now acquire shareholding in Paratus Namibia

Promotion

20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.