Businessman Hezi Bezalel is promoting a new investment fund for investments in African countries. The fund has been conducting a roadshow in recent days among investment institutions and private investors in Israel as part of its effort to raise up to $300 million, sources inform "Globes."
The fund has already obtained commitments totaling $100 million from overseas investors. As far as is known, investors from Israel have expressed interest in investing in the fund, although it is not yet known at this stage whether there are any official commitments to invest.
The fund is an unusual investment instrument for Israeli investment institutions seeking to diversify their investment portfolio, although it clearly involves risks.
The fund, Duet Marathon, is a partnership between UK investment firm Duet and Bezalel's Marathon group. Duet Marathon, a private equity fund, is slated to invest in businesses linked to private consumption in some Africa countries: food and beverages, retail, health services, finances, communications, etc.
The focus will be on 8-10 specific countries in Africa regarded by the fund as being relatively stable politically, with little corruption and comfortable exchange rates. The planned investments will include Rwanda, Senegal, and Angola. The fund has already singled out interesting investments to be made as soon as the fund is closed. The timetable mentions the first quarter of 2016. The duration of the fund's investments is expected to be eight years.
Very experienced and well-connected in Africa
Bezalel is the owner of Israeli communications company 018 Xfone, which participated in the cellular tender in 2011, following which HOT Mobile Ltd. and Golan Telecom Ltd. enttered the local market. After winning the tender, Xfone was disqualified because it did not manage to provide the required guarantee, since most of Bezalel's assets are overseas. The company has recently been making renewed efforts to enter the market.
At the same time, Bezalel has been Rwanda's honorary consul in Israel since 2007. Most of his business career has been in Africa, with a focus on banking and communications. Bezalel, who immigrated from Iraq to Israel as a child, came across East Africa in the 1980s as part of his work at a UK investment bank. He realized the potential, and began operating independently in the continent, mainly in Uganda, which undertook massive privatization in the 1990s.
Bezalel is very experienced and well-connected in Africa, and the same is true of UK fund Duet Group, his partner. Founded in 2002 by Henry Gabay, Duet Group manages $5.5 billion, with investments in hedge funds, private equity, and real estate.
In the private equity segment, for example, the fund has invested in an Ethiopian brewery. Duet Group also has funds specializing in Africa in specific sectors. Duet Group's main offices are in London, and it has branches in Dubai, New York, New Delhi, Cairo, and Accra, the capital of Ghana.
Duet Group previously tried to take over Habas HZ Investments Ltd.(TASE: HABS), which collapsed. In 2013, the fund offered to invest €57 million in Habas for its main asset - shares in Dutch real estate fund NSI. The offer did not go through, after the fund withdrew it, and the liquidators of Habas sued Duet Group. Several months ago, the Habas creditors lost the case, when a Dutch court dismissed their claim against Duet Group.
Last week's Globes Israel Business Conference included a panel on investments in Africa. Milken Institute senior fellow Glenn Yago, who moderated the panel, noted that the African economy was among the six fastest growing economics in the world, and has already overtaken the Latin American economy.
"On the other hand, there are many challenges, because no African market has many banks, and there are also infrastructure gaps. In any case, the progress there is impressive, and one of the main business goals is to foster a work force in Africa that will overtake China and India by 2040," Yago said.