One of the biggest barriers to investing in Africa has been the fear of not getting money out. Africa’s young but growing secondary market is helping provide liquidity, especially for fund managers with strong track records.
This week, Johannesburg-based Sango Capital acquired assets totaling over $120 million in four African funds from an institutional investor looking to rebalance its portfolio. Sango put up its own capital and raised more from African investors as well as US-based family offices making their first investments on the continent.
The deal, which took around three months to seal, involved 30 investments from the four funds, which had backed companies in financial services, fast moving consumer goods, infrastructure, and light manufacturing in over a dozen African countries.
“This transaction reflects everything Sango has built over 15 years: the analytical depth to underwrite complex African portfolios, the relationships to source off-market opportunities, the structuring expertise to create solutions for LPs and GPs navigating liquidity, and the local GP relationships to enable smooth asset transfers,” Sango’s Richard Okello said in announcing the deal.
For Sango, recycling capital has always mattered as much as its deployment. The firm, now managing around $1 billion in assets, has been active in secondaries since 2016, using a wide range of innovative structures.
“In a healthy market, you have movement of investors,” Okello, a former partner at US-based Bridgewater Associates, tells ImpactAlpha.
“The secondary transaction has a shorter runway to delivering returns, and so the investors can come in and participate in the development process, as it were,” Okello says. “We are able to bring in investors who have not been in Africa before this transaction.”
Track record
In 2024, secondary sales represented 32% of the 63 exits recorded in Africa, according to the African Venture Capital Association. Okello believes those figures are conservative.
“The pace of activity is definitely on the upstream, meaning there are more [secondaries] that are happening, and a larger percentage of those are slowly going to get reported,” he says.
Mauritius-based Adenia Partners, which raised $180 million in the first close of its Adenia Entrepreneurial Fund I, acquired a majority stake in Parkville Pharmaceuticals at the start of the year from Rwanda-based Admaius Capital Partners. This marked the first exit in Admaius’ Virunga Africa Fund I. In 2024, British International Investment sold stakes in a fund by India-based Aavishkaar and Netherlands-based Goodwell Investments as part of its ambition to seed a secondary market in both regions. Last year, Switzerland-based Blue Earth Capital bought BII’s and employees’ stakes in Nigerian fintech Moniepoint.
Secondaries, according to BII’s John Owers, “can play a mobilization role, increasing flows to undercapitalized markets from non-DFI commercial investors by removing blind-pool risk.”
Okello says a functioning secondary market creates healthier companies by stabilizing their ownership and avoiding forced exits or strenuous liquidity demands. “You might argue, ‘What’s the additionality? Does it create new jobs? Well, the business is running. You need a stable investor base for a business to work.”
This secondary transaction was just the latest for Sango since its launch over a decade and a half ago.
Sango executed two LP roll-ups last year and the year before that when it acquired a majority share of LP interests in two of Lagos-based Synergy Private Equity’s funds. Sango bought out most LPs in the fund and worked alongside the GP to structure exits and support portfolio management.
Last month, Sango created a continuation vehicle to manage tail-end fund assets for its Sango Capital Partners fund, which raised over $100 million since 2011 from global endowments, foundations, pension funds, and family offices. Sango says the vehicle attracted new European LPs who provided additional liquidity to Sango’s original investors.
Other transactions include a traditional secondary sale in 2016 where some European investors needed to exit a fund. In 2019, Sango bought assets from a GP based in Southern Africa that was winding down its fund. The deal involved co-creating a platform to combine the GP’s assets with some of Sango’s and manage them together rather than as isolated investments. Okello says Sango has partially exited the platform.
“Although deal volumes remain resilient, there is still room for differentiated capital to flow into secondary private equity, helping funds nearing the end of their life cycles manage assets they haven’t exited,” Okello wrote in a recent guest post on ImpactAlpha.
Liquidity as an opportunity
The latest transaction is one of several that the firm is planning to execute moving forward, providing liquidity to its investors and banking on its history of consistently attracting commercial capital. Sango is one of the few African funds that hasn’t secured funding from development financial organizations.
Looking forward, Okello predicts a wild swing in secondary transactions over the coming years as concerns over issues like currency depreciation, which affect both primary and secondary markets, start to wane.
“The markets that we are most active in are mostly floating their currencies. Their currencies are trading like market-rated currencies, so there’s volatility, but they’re floating. That concern has gone down a lot,” he says, meaning this volatility is more manageable since it is visible and easier to hedge against.
“I don’t see liquidity as a challenge, I see liquidity as an opportunity,” he says.
Correction: A prior version of this article stated that the deal took nine months to seal. It took three.
