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Preference shares in issue: 7 470 366
Auditor: BDO Spencer Steward
Preference share market capitalization: USD 8.9 million
Number of equity investment holdings: 6
Net asset value per preference share: USD 1.191


The Company’s objective is to generate above average investment returns from the investment opportunities the Directors introduce through their involvement with various investment structures and/or corporate networks, mainly in Africa. The Company evaluates investment decisions with the aim to deliver a total USD portfolio return of at least 12,5% per annum above the annual change in the United States Consumer Price Index over the lifetime of the investment.

The Company may invest in any asset class, listed or unlisted, in any investment market and in any currency provided 75% of its effective investment exposure (other than cash) is in PE Assets. Any individual investment (at cost) may not comprise more than 30% of the total portfolio value at the time, or USD 8.0 million whichever is the greater.


2016 -2.0% 1.6% -0.4%
2017 5.9% 4.0% 3.7% -10.9% 1.7%
2018 3.1% -1.2% 2.0% -2.8% 1.0%
2019 1.4% 4.7% 5.2% 4.3% 16.4%
The APEO investment portfolio annualised internal rate of return since inception is currently 8.9%.


(USD’000) Novare II Alphamin Addis Pharma African Alpha betPawa Hastings Total %
Nigeria 623 - - - 268 - 891 10%
Zambia 424 - - - 402 - 826 9%
Mozambique 199 - - - - - 199 2%
DRC - 829 - - - - 829 9%
Ethiopia - - 192 1,636 - - 1,828 20%
Kenya - - - - 993 - 993 11%
Uganda - - - - 1,207 - 1,207 13%
Ghana - - - - 630 - 630 7%
Tanzania - - - - 228 - 228 2%
United Kingdom - - - - - 480 480 5%
Net Cash - - - - - - 1,029 11%
TOTAL 1,246 829 192 1,636 3,729 480 9,141 100.0%


(USD’000) Novare II Alphamin Addis Pharma African Alpha betPawa Hastings Total %
Mining - 829 - - - - 829 9%
Property 1,246 - - - - - 1,246 14%
Manufacturing & Distribution - - 192 1,636 - - 1,828 20%
Fintech - - - - 3,729 - 3,729 41%
Insurance 480 480 5%
Net cash - - - - - - 1,029 11%
TOTAL 1,246 829 192 1,636 3,729 480 9,141 100.0%


INVESTMENT Current Value USD'000 Growth* USD'000 Value* USD'000 % of portfolio Date acquired Profit /(loss) to date USD'000 IRR to date Investment return x Return current quarter
Novare II 1,246 1,246 14% Jul-16 -227 0% 0.8 -0.7%
Alphamin 829 829 9% Sept-16 -678 0% 0.6 -20.4%
Addis Pharma 192 192 2% Oct-16 -71 0% 0.7 0.0%
African Alpha 1,636 1,636 18% Jul-17 626 34% 1.6 23.2%
betPawa 3,729 3,729 41% May-18 2,207 71% 2.5 10.4%
Hastings 480 480 5% Nov-18 -37 -6% -0.1 -6.1%
Net cash 1,029 1,029 11%
TOTAL 9,141 5,557 3,584 100% 1,357 9% 1.2 5.3%
Growth vs Value Split* 61% 39%
* Being an analysis of Investments bought mainly on prospect of growth(“Growth”) vs Investments acquired at good values which will give a return even with lower growth (“Value”)

The portfolio has shown growth in the past quarter of 5.3% before costs, supported by a strong performance from African Alpha and betPawa. No additional investments or realizations were made in the past quarter except for a USD52k draw down by Novare II against our investment commitment. A summary of developments in each investment is set out below:


Novare II develops retail and commercial developments in major African cities, comprising of nine projects in Abuja, Lagos, Lusaka and Maputo with total capital invested of USD 320 million. Seventy four percent of the investment commitment towards the fund had been drawn down by quarter end. With seven of the eight building projects operational, we expect the remainder of the undrawn commitments to be called for in due course most likely to retire the debt in the Fund, or to fund a final project with attractive return projections should the rental market show a substantial upturn.

Although all developments are well maintained with reasonable occupancies, pressure on attaining rentals in line with original projections, and collecting contracted for rentals in general remains a major problem. We expect a slow recovery in Nigeria and Zambia, with the outlook for Mozambique expected to improve in the next year as very significant Mozambique foreign direct investment projects become visible. Novare II has very low gearing, sufficient cash resources to retire all debt if required, and adequate time to manage its assets until there is a step change in demand for them. The current independent valuation of Novare’s assets, which we use to value the investment, is 15% below original cost.


Alphamin owns the richest known orebody of tin in the world, situated in North Kivu Province, DRC. The company drilled out and proved only a small portion of its prospecting licensed area, large enough to start a small mine and prove the concept. The mine commenced mining operations in August 2019.

The mine is operating in line with budgeted forecasts in respect of the mining operation and the ore concentration plant. The collapse of a pivotal access bridge across a major river required to transport tin concentrate out and diesel and cement in was successfully mitigated in the past three months, with full access now having been being restored. The mine will be directing the bulk of its cash generated over the next two years towards debt servicing and reduction and further exploration, before dividend payments are likely to commence. The tin price remains soft, but within the boundaries of the original mine feasibility study.

Alphamin is listed on the Toronto Stock Exchange where it traded (in low volumes) at 0.16 CAD at quarter-end, which is 21% below the share price at the end of the prior quarter, and 45% below our original cost. We use the listed share price in our quarterly valuation process, but it does not in our view reflect the intrinsic value of the mine. We have a high level of confidence that the controlling shareholder, Denham Capital will be effecting a programme to extract significant value for shareholders over the next two to three years.


Addis Pharma manufactures a broad range of pharmaceuticals at good EBITDA margins for the Ethiopian public and private sector, in a country with over 100 million people. Only 20% of Ethiopia’s pharmaceuticals are manufactured in Ethiopia, with the balance being imported.

The business continued to trade profitably but with limited growth in revenue, which requires a change in control to unlock its potential. The Fund withdrew its plans announced in the prior quarter to invest an additional USD500k into Addis Pharma because our investor consortium’s offer to take control of Addis Pharma from the Ethiopian NGO which owns 51%, remains subject to suspensive conditions.

Because of the delay in effecting a change in control, we retained the valuation at the previously marked down level which is supported by current results, and 28% below original cost.


The company offers Fast Moving Consumable Good (“FMCG”) exposure to the high growth Ethiopian economy (8% plus economic growth p.a.) through an investment in a number of businesses including Bluebird Holdings. We backed a strong private equity team on the ground against FMCG competition which is generally undercapitalised and fragmented, in addition to a lack of committed international FMCG competitors. The strategy is to aggressively grow revenue and profits by extracting economies of scale through combining management resources in procurement, marketing, administration and sales across the various businesses, before selling the business as a unit to an international FMCG business wishing to enter Ethiopia.

Both the Oil and Soap businesses continued their very strong growth in revenue and profits in the latest quarterly results on the back of adding additional manufacturing capacity, with the Oil business also benefitting from improved margins following a change to excise duty being levied on imported edible oil. The Food (flour and pasta) business also made a significant contribution to revenue growth for the first time, but profitability was still lagging. The Dairy and Water divisions continued to underperform. Management changes have been effected recently in the three lagging businesses with the aim to turning them to profitability.

Bluebird Holdings was presented with two awards at the annual Private Equity Africa Awards Gala Dinner in London on 9th October 2019. It won the Improvement and the Development Impact awards for African Portfolio Company of the year (two out of four awards available in this category).

The group grew revenue at 87%, and EBITDA at 195% in the latest reported quarter. We valued the investment at the latest value at which capital was raised, which was at a 15% discount to the African Alpha manager’s comparable earnings multiple valuation, representing a 11 historical EBITDA multiple.


Established in late 2013, betPawa is a UK registered holding company with licensed African online (smart phone) sports betting subsidiaries. betPawa was established by a Danish entrepreneur who applied or acquired betting licenses in - country over the past five years, and the software was acquired via an acquisition it made in Estonia. Currently it is operational in Kenya, Uganda, Nigeria, Ghana, Tanzania and Zambia. We invested in order to get exposure to a fast-growing consumer business in Africa with a strong technology platform and limited physical footprint, managed by a dynamic management team.

Notwithstanding industry wide licensing issues in Kenya since July 2019 (which have still not been resolved), year on year group revenue and EBITDA growth is running at 104% and 215% respectively on the back of strong growth in other African countries. betPawa is currently valued at a conservative 10 times historical EBITDA given its exceptionally high growth rate. The investment’s annualised IRR in our portfolio is 71%.

We expect betPawa to keep growing strongly as its propriety software continues to be an advantage in the fast growing sub- Sahara African mobile betting market.


Hastings Group is a motor and household insurer established in 1997, with its largest shareholder being the Outsurance group from South Africa. Hastings is a market leader in the UK, and they have various brands under the Hastings Group umbrella. The company has a strong focus on capitalizing on the current trend seen with UK insurance consumers to make use of ‘aggregator’ sites used to compare quotes from different providers. The company has a strong focus on constantly improving and implementing state-of-the-art technology and leverages these systems to not only improve its ability to evaluate risks, customer offering, but also to keep overheads at a minimum.

Hastings is a publicly listed company listed on the London Stock Exchange. The share price decreased 6% over the prior quarter following a temporary tightening of general insurance margins in the UK.. We continue to believe the current valuation to be in deep value territory, with the business well placed to increase earnings as the UK insurance market keeps showing a client preference for quote aggregator platforms. Brexit is not expected to have a major impact.

12. CASH

APEO keeps the bulk of its free cash in short term money market instruments which earned 7.5% during 2019. After providing for future draw- downs from Novare, APEO has USD 800k in free cash available for future investment.


We expect strong performance from the portfolio over the next 2 years, and we remain on track to better our underwriting criteria of US inflation plus 12.5% per annum. We continue to search for attractively priced investment opportunities where we have good insight into the potential risks and rewards.


Rudolf Pretorius

Brendon Jones

Brett Childs

Adriaan van Wyk

James Henry


This document is intended to be utilised for information purposes only. Should you choose to use this document for any other purposes other than information, you should do so with the assistance of professional advice. APEO not is acting or purporting to act in any way as an advisor. If you rely on this information for any purpose whatsoever, you do so at your own risk. APEO does not accept any liability of whatever nature and howsoever arising in respect of any claim, damage, loss or expense, whether caused directly or indirectly including consequential loss or loss of profit, arising out of or in connection with you, the user, on the contents of this document, or the user of the information products and services described in this document. This document is for information purposes only and does not constitute or form part of any offer to the public to issue or sell, or any solicitation of any offer to subscribe for or purchase an investment, nor shall it or the fact of its distribution form the basis of or be relied upon in connection with any contract for investment. Investors should take cognisance of the fact that there are risks involved in buying or selling any financial product. Illustrations, forecasts or hypothetical data are not guaranteed and are provided for illustrative purposes only. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. Past performance is not necessarily a guide to future performance and no guarantees are provided. The user agrees to submit exclusively to the law of the Republic of Mauritius and the jurisdiction of the courts of the Republic of Mauritius in respect of any disputes arising out of use of this document.

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