London headquartered TLG Capital is looking to invest up to $15 million in growth capital in Indian firms that are keen on tapping market opportunities in the African continent.
TLG Capital, which former Goldman Sachs banker Zain Latif founded in 2009, is an investment firm focused on the frontier markets in Sub-Saharan Africa, but sees value in connecting India's innovative growth firms to a potential Sub-Saharan investment initiative.
"We are especially keen on India's growth stage services companies which have the transmigration potential - in terms of transferable technology and human capital. Companies that are tracking the 'emerging consumer' through innovative business models and can participate in healthcare, education, food processing and retail amongst other sectors in Africa. While we look at the Africa angle, it does not exclude us from investing into good standalone opportunities here," Sidarth Menon, who is leading up operations for India at TLG Capital, and is based in Bangalore, said.
A little over a year-old TLG, backed by Kuwaiti institutional investors, has already completed four investments and is finalising details on raising two separate funds that will invest directly into African assets or joint ventures, and a second special situations fund that may back the smaller firms in other emerging markets (such as India) with transmigration potential to the African continent.
The first off the block will be the Africa fund, which may be at least $100 million in size, even though TLG said the size of the proposed funds is still not decided. “We are still in the process of investing our existing monies and hope to announce two more deals prior to the end of 2010 highlighting our ability to traverse difficult markets and create value,” Menon said.
TLG is currently investing from the Kuwaiti anchor investor's corpus commitments as well as by syndicating the deals to other investors. “Given the interest levels in frontier markets in general, TLG has been approached by a number of private equity funds in jointly developing the investment platform in Africa. So, at this stage, we are assessing our options but closing deals is a priority for us,” he added.
TLG has invested in African markets like Uganda and Ghana where it has made investments in pharmaceuticals and healthcare. One of these include investment into Uganda's Quality Chemicals Industries a joint venture with Indian pharma major Cipla for manufacturing antiretroviral drugs.
It announced its debut Indian deal, a $5-million investment in Kolkata-based Re-Feel Cartridges, two months back. "There's a significant opportunity for IT support infrastructure player like Re-Feel in Africa, which is underdeveloped at this point of time. But this firm will look at the Africa story in the next two years, as it still has to tap a great deal of growth potential in India," Menon added.
The firm also clinched another opportunistic deal in Cambodia where it invested in a cruise that operates along Mekong river.
These investments will become the seed capital for its proposed Africa and India & other emerging markets fund. TLG would have invested around $25 million by the end of 2010.
"Africa as a whole is moving on. It is tremendously rich in natural resources. The challenges on the ground are in someways similar to that in India. With India’s low-cost innovative technology platforms and the skilled human capital, there is a strong argument for a South-South investment theme," Menon said, while explaining that TLG Capital will focus on relatively under-banked growth opportunities in Africa.