Case Studies

Alkebulan was mandated by the Royal Exchange group to raise equity for its general insurance business in anticipation of increased capital requirements in Nigeria. We approached a number of funders, but it became clear that a transformational solution may be needed in the form of a blue chip impact private equity fund that would provide capital as well as other expertise including technical support products. This could set the foundation for follow-up private capital. The InsuResilience Investment Fund, managed by BlueOrchard Finance Ltd made the first investment, introduced key performance indicators, new products, balance sheet improvements and enhanced the board expertise. The confidence created by this investment allowed a follow up investment from Africinvest-FIVE, one of the continent’s premier private equity managers. The success of the capital raising strategy has allowed the company to focus on its business, and the subsequent recovery in the parent company’s share price is evidence of this.

An investor partner commented: "Many thanks for your valuable contribution to the completion...we liked very much interacting with you and we truly appreciated your intervention in resolving the numerous deadlock we have faced during the process."

During the Great Financial Crisis, a Scandinavian private equity fund, active in emerging markets, suffered catastrophic losses. The Alkebulan founders were responsible for the fund relationship at their previous employer. Years after the crisis, one emerging market bank still had significant exposure to the fund. The fund asked Alkebulan to design a mechanism for repayment and negotiate a final settlement with the bank. Alkebulan was able to assess the impact of the debt on the bank’s liquidity and regulatory capital and understood the political implications of the remaining exposure on the bank’s reputation. As result, the fund managed to negotiate a US$10 million dollar discount upon final settlement, allowing it to continue its impressive growth strategy.

The client said:

“You should be proud of your work. 100% recovery of EUR 400m with a pledge on two bankrupt entities and a personal guarantee by one bankrupt individual is not bad, it’s phenomenal. This is something you can tell your grandchildren.”

Alkebulan advised a Canadian entity in respect of its $450 million acquisition of OML 25 in partnership with Seplat Energy who provided the funding. The final closing condition was approval from the Nigerian Minister of State for Petroleum Resources. However, as a consequence of various domestic political factors, the NNPC exercised its pre-emption right in respect of OML 25, leading to a number of legal actions in Canada, UK and Nigeria. Whilst the court actions were progressing, most of the funds remained tied up in escrow with an international bank. The Canadian client asked Alkebulan to mediate between it and Seplat in light of information they gathered as to possible reasons for the pre-emption, and the sources of the pre-emption funding. The mediation resulted in the client receiving significant compensation, whilst Seplat was allowed to obtain access to the funds in escrow to support their liquidity requirements.

The Seplat Energy CFO mentioned afterwards that although Alkebulan’s mediation rescued Seplat from a liquidity crunch, the abandoned transaction unfortunately cost the company more than $120m in direct and indirect expenses.

Alkebulan was mandated by a nimble and entrepreneurial Mauritian/South African private equity fund that needed urgent assistance to purchase Everite Building Products, a leading South African manufacturer, from Group Five, the sale being a consequence of the latter’s business rescue process. The dislocation caused by Covid-19 in the financial markets and the uncertainty that it brought to the assessment of investment opportunities made the sale of Everite challenging notwithstanding its world class manufacturing facilities and management team. Together with the private equity fund, Alkebulan prepared detailed analysis, financial modelling and structuring solutions and convinced a number of financial institutions to show interest in the asset. It was important to convey to both debt and equity investors that Everite itself was healthy, and not part of the cause of Group Five’s financial challenges. The transaction was made more unique considering the difficulty to conduct due diligence during the pandemic, but these head winds were used to the collective advantage of all interested parties to provide a solution and path to completion that was not deemed possible.

"The Lonsa and Legacy Africa’s acquisition of Everite was nominated at the Ansarada Dealmakers Annual Gala Awards 2021 as deal of the year"

Alkebulan was approached to assist with raising acquisition finance for the divestment of the interest an International Oil Company held in a significant producing asset. However, the balance sheet of the acquisition vehicle were not of a sufficient quality to leverage with a view to raise the acquisition price. A combination of significant equity that would dilute the sponsors and debt acquisition funding was needed. However, on closer inspection, it appeared that the vendor financing that the IOC was willing to provide did not impact the debt capacity of the operating company and accordingly Alkebulan managed to structure acquisition funding secured on the barrels in the FPSO, coupled with tight control over the bank accounts for the duration of the loan. The structure also took advantage of the embedded value that accrued to the client after the finalisation of the SPA because of the significant increase in Brent in 2021. While the funder therefore managed to derisk its credit exposure in large part, the solution also allowed the client to acquire the asset maintaining full ownership.

“One thing I assure you, I won’t do any of these deals with anybody else"

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