The Abraaj group, one of the world’s largest private equity funds, has been increasingly turning its focus towards Africa, a market it considers the next realm for unprecedented growth driven largely by consumer spending. “Our faith and belief in the African consumer story is dramatic because the African consumer today, in my opinion, is well neglected,” Arif Naqvi, the group’s CEO, told Ventures Africa at the World Economic Forum last year in Davos. “Everybody looks at Sub-Saharan Africa and calls it a resources story. I’ve always called it a consumer story.”
Abraaj, which focuses mostly on emerging markets—known for their high risk, high reward business climate—has put its money where its mouth is, investing over $2.5 billion across the continent’s top markets (including Kenya, South Africa, and Nigeria) over the past couple of years. This April saw the firm close a $990 million sub-Saharan Africa fund, its third in the region.
In Africa, Nigeria offers the investment group its biggest consumer market. Despite a host of political and economic uncertainties—notably security, corruption, and the global oil crisis—Nigeria remains Africa’s most populous nation with more than 170 million people. It also has one of the world’s youngest and fastest growing populations, an attractive statistic for any consumer-driven investor.
Economically, Nigeria still holds Africa’s largest economy, with a GDP of $510 billion, though the recent oil crisis has dealt a huge blow to its growth forecast, which was previously one of the highest globally.
Abraaj has wasted little time taking advantage of the enormous potential offered by the Nigerian market. This week, the investment group announced that it had acquired a significant stake in Mouka Foam, a leading mattress manufacturer in Nigeria. “We’ve long been interested in the mattress-manufacturing space, and have carefully reviewed a number of opportunities in the past,” said Mustafa Abdel-Wadood, a Partner at The Abraaj Group. “The market opportunity for high quality sleeping products offers good potential for growth, and we believe Mouka is very well positioned to capitalize on this.” The Mouka stake was acquired from Actis, another global investment firm actively present in Africa.
Mouka is a household brand name in Nigeria and a leading manufacturer in the Nigerian foam and bedding space. The Company has an extensive distribution network across the country, partnering with over 500 distributors who operate through more than 1,000 outlets.
But this isn’t Abraaj’s first foray into the Nigerian market. In 2013, the group bought over the West African FMCG company, Fan Milk. The deal was reportedly the largest PE transaction in Sub-Saharan Africa outside of South Africa. “Abraaj is one of the most active investors on the African continent, with a particularly strong track record in Nigeria. We continue to see significant upside potential across the country in tandem with the fast growth of its population and the expansion of its middle class.”Abraaj’s deeply diversified investment portfolio for Nigeria now includes: AOS Orwell, C&I Leasing, Custodian & Allied Insurance, Computer Warehouse Group, The Bridge Clinic & PathCare, and Lily Hospitals.
Last year, Egyptian-born Mustafa Abdel Wadood, who serves as a partner and chairman of Abraaj’s Management Executive Committee, offered a peak into Abraaj’s strategy for achieving so much success despite investing in the world’s most difficult places. The key, he said, was engagement; being to close to your investment. So an on-the-ground team is paramount to the fund’s operations.
It is no different for its investment in Mouka Foam. Abraaj will team up with the Moukarim Family (Mouka’s founding family) to strengthen the mattress maker’s domestic leadership position and enhance the company’s product offering, distribution network and geographic presence.
As the years run by, Abraaj is gradually deepening its footprint not only across difficult but rewarding markets like Africa, but within Nigeria–a market that currently holds so much uncertainty but has a long history of providing investors with healthy returns.
