Mauritius-based private equity firm, Synergy Capital Managers, has acquired interest in Northstar Finance Services, a platform focused on providing consumer finance services across West Africa in a deal whose terms have not been unveiled.
Udo Udoma & Belo Osagie and Banwo & Ighodalo provided legal advisory services for the deal as PwC conducted the financial and tax due diligence for the transaction.
“With this investment, we are confident that Northstar can become the personal finance institution of choice in the region. The complement of businesses and products offers a unique value proposition for Northstar’s customers that would be difficult to replicate,” said Akintoye Akindele, a partner in Synergy Capital while appreciating the deal.
Northstar Finance Services seeks to build a portfolio of finance services assets that include Safetrust, a Nigeria-based primary mortgage institution, Ping Express, a technology-driven international remittance company specialising in secure, low-cost and highly efficient delivery of funds, and Avance Insurance, which provides innovative life insurance and savings products to the rapidly growing Ghanaian middle class.
Ping Express, one Northstar’s portfolio companies, recently acquired an operating license from the Central Bank of Nigeria (CBN) to provide its fund remittance services in the country.
Akindele said that Synergy Private Equity Fund held its final close in September 2015, exceeding its $100 million hard cap with commitments from a range of investors which included four of the most active development finance institutions in Africa, seven commercial investors and one sovereign wealth fund.
Synergy Capital has over $100 million in its private equity portfolio, which it has used to make investments in 8 companies.
Synergy Private Equity Fund invested in MSY Analytics in late 2016 to help the data analyticscompany expand its reach across the African continent, deepen its product offerings, and capture a larger market share.
In its drive to bridge the huge supply gap in consumer financial services products primarily in Nigeria and Ghana. Northstar Finance’s portfolio also includes Fast Credit, a short-term lending institution that operates in Nigeria and Ghana, and Northstar Home Finance Ghana.
An International Monetary Fund (IMF) report, ‘Financial Development in Sub-Saharan Africa: Promoting Inclusive and Sustainable Growth”, revealed that over time, financial depth has increased in sub-Saharan Africa but has generally not caught up with that of other developing countries, in part reflecting lower average income levels in sub-Saharan Africa.
The report said that the region’s median ratio of private sector credit to GDP has increased by almost 10 percentage points since 1995, to about 21 percent in 2014. However, it remains only about half the size of that in the Middle East and North Africa, East Asia, and Latin America and the Caribbean, driven by sub-Saharan Africa’s relatively high number of low-income countries in which the median level of credit to the private sector is similar to that of other low-income countries.
The IMF said in the report that financial development positively affects growth through several channels that are important for sub-Saharan Africa as it helps catalyze savings into more usable forms, and supports efficient allocation of capital and enhancement of total factor productivity.