Helios buys Africa Oil stake after Equity Bank stock sale
An oil rig at Ngamia-1 site in Turkana County. Helios is seeking to boost investment in oil sector. PHOTO | FILE
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It will effect the buying allowing it to nominate a non-executive director through one of its investment vehicles, Stampede Natural Resources.
Helios said this is its fourth oil and gas company investment, making them one of the most active private equity groups in the African oil and gas sector.
The Africa Oil deal could also signal Helios is deploying the Sh100 billion raised in an Africa-focused fund in January—one of the largest amounts ever raised by a PE firm in Africa.
Helios Investment Partners, which last month completed selling half its stake in Equity Bank, has taken a 12.4 per cent stake worth Sh9.5 billion ($100 million) in Africa Oil Corporation.
It will effect the buying allowing it to nominate a non-executive director through one of its investment vehicles, Stampede Natural Resources.
The investment in the oil exploration firm is expected to boost capital for drilling work in northern Kenya.
Toronto-listed Africa Oil has been carrying out vast oil exploration work in Kenya, Ethiopia and Puntland (Somalia) through its equity interest in Africa Energy Corp. It is notably in partnership with Tullow Oil which has discovered significant deposits in Turkana Kenya.
“This relationship will not only be of short-term benefit by strengthening our balance sheet and allowing us to continue with drilling and pre-development work, but also has the potential to provide a core investor as the Lokichar Basin development project progresses,” said Africa Oil president and chief executive officer Keith Hill.
“We consider (this) a strong endorsement of the project, despite the current oil price downturn.”
Helios said this is its fourth oil and gas company investment, making them one of the most active private equity groups in the African oil and gas sector.
The deal, still subject to regulatory approval, comes at a time oil prospecting firms are becoming more cautious in capital outlay as financing shrinks with low oil prices.
“This is a flagship transaction for the firm to help develop Kenya’s nascent petroleum sector. The capital is being deployed to further this exciting project which we consider to be world class in terms of potential. It has all the right characteristics for the sector in a lower oil price environment,” said Helios oil and gas partner Andy Bartlett.
Helios, established in 2004, has made investments in countries across Africa, including Nigeria, Ghana, Kenya, Tanzania, Angola, South Africa and Morocco. It invests between $30 million (Sh2.8 billion) and $200 million (Sh19 billion) in each company.
The latest financing deal by Helios follows its sale of a 12.22 per cent stake in Equity Bank to Norwegian investment funds Norfund and Norfinance as. Helios was the biggest shareholder in Equity with a 24.99 per cent stake until the sale.
Though the Equity Group Holdings stake sale amount was undisclosed, a 12.22 per cent stake in the bank at the time the deal was announced in February was valued at Sh23.5 billion at a prevailing share price of Sh52.
The PE first invested in Equity in December 2007 when it bought the 24.99 per cent stake for $178.7 million or Sh11 billion.
The Africa Oil deal could also signal Helios is deploying the Sh100 billion raised in an Africa-focused fund in January—one of the largest amounts ever raised by a PE firm in Africa.
Helios’ other investments in Kenya include a $40 million (Sh3.8 billion) investment in Wananchi Group made in October 2013 and a 40 per cent stake in downstream oil player Vivo Energy made in 2011.
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