 |
 |
 |
 |
 |
 | ||||
Zimbabwe David fells Mugabe Goliat... Woolworths geared to go shopping Down Un... Drumbeat of change pulses across African... Citibank fund has muscle to make deal... |
Citibank fund has muscle to make deals
CORPORATE FINANCE
CITIBANK, the US-based investment bank, has launched a $120-million venture capital fund which it manages and funds from its own resources. Launched last year, the fund made its first investment when it bankrolled the acquisition of Prime Office Furniture by a group of entrepreneurs led by Tshepo Mahloele. Eric Wright, who heads the fund, says it is geared towards providing capital assistance to entrepreneurs and empowerment groups. Areas of activity include the financing of management buyouts, unbundling, privatisation and start-ups. Wright says the fund will invest in most industries with good management and strong, consistent cash-flows. It avoids investments in companies related to alcohol, tobacco and the military. Venture capital funds provide cheaper funding to established private business through new share capital or shareholder loans. Day-to-day running of companies is usually left to existing management, although the fund's equity stake entitles it to board representation. Funded companies thus benefit from strategic inputs. However, the advent of venture capital funds has not been matched by investment opportunities in private companies. "It is difficult to find investments that provide the type of returns which justify the risks venture capital funds are taking. But we will find a way of leveraging Citibank's global experience in venture capital to attract investments that match our criteria," says Wright. He expects Citibank's activity to accelerate in 1998 with additional investments coming up in the first quarter. Citibank is also active in the venture capital business globally, being a lead investor (but not manager) in the $120-million New Africa Opportunity Fund and the $120-million Modern Africa Growth and Investment Fund. Top of page
|
