Raising Capital In The United States To Acquire A Business In Africa
Raising Capital In The United States To Acquire A Business In Africa
Why Sponsors Raise Acquisition Capital In The United States
- Depth and product range. Banks and private credit funds in the US support senior term loans, unitranche lines, delayed-draw facilities, mezzanine, and preferred equity. The market also supports 144A notes and private placements for larger programs.
- Execution certainty. Dedicated emerging-markets teams exist across private credit and special situations. These teams understand share pledges, offshore cash control, and enforcement in mixed-law transactions.
- Repeatability. A US holdco or topco with clean governance can raise follow-on capital faster than asset-by-asset funding at the operating company level.
- Access to co-investors. Family offices and sector funds often co-invest alongside private credit, which can complete a first-close while equity syndication continues.
Capital Stack Options For African Acquisitions Funded From The US
Common Legal And Cash-Flow Structure
Most cross-border acquisitions use a US or offshore topco that raises debt and structured equity. That entity acquires a regional holding company that owns the African operating subsidiaries. Lenders secure share pledges at each tier and take control over cash at the level where law and banking practice allow predictable enforcement. Dividends and management fees move cash to the debt service account at the topco under tested tax and exchange control rules. Where local rules restrict upstreaming, lenders require cash sweep arrangements, reserve tests, and step-in rights at the regional holdco.
FX, Convertibility, And Repatriation
- Currency mix. Many targets earn in local currency while debt service sits in hard currency. The model must include hedging costs, potential basis risk, and value-date timing across banks.
- Convertibility and transfer. Sponsors confirm central bank rules, documentation needed for dividends and interest, and any sector-specific limits. Delays are priced into liquidity and covenant headroom.
- Cash control. Lenders often require collection accounts in approved banks, daily or weekly sweeps, and minimum cash levels before distributions.
Security, Enforcement, And Legal Opinions
Credit committees focus on the enforceability of share pledges and guarantees, recognition of judgments or awards, and the path to appoint receivers where law permits. Deals include legal opinions on capacity and due execution, perfection of security, and recognition of choice of law. Where direct asset security is complex, lenders rely on upstream share pledges and negative pledge covenants, combined with information rights and financial triggers that move the file to cure before value erodes.
Due Diligence And The File Credit Officers Expect
- Five-year model with sources and uses, revenue drivers, margin build-up, capex and working capital, base and downside cases.
- Historic financials, bank statements, and customer concentration analysis.
- Pricing power, supply risk, and regulatory exposure by country.
- Corporate records, cap table, shareholder agreements, and material contracts.
- Licenses and concessions, labor matters, land or lease rights where relevant.
- KYC on sellers and key managers, sanctions and adverse media checks.
What Drives Pricing And Leverage
- Sector stability and cash flow volatility across cycles.
- Currency profile and hedging cost relative to EBITDA.
- Security quality and enforcement path.
- Quality of management bench and continuity commitments.
- Governance and reporting discipline at the target.
Process And Timeline From Teaser To Closing
- Week 1. Teaser and sponsor profile to a controlled list. Quick view on leverage range, currency, and security feasibility.
- Weeks 2 to 3. Data room, model, and credit memo ready. Early feedback on covenants, cash sweep, and required opinions.
- Weeks 4 to 5. Term sheets and fee letters. Intercreditor drafts if mezzanine or preferred equity are included.
- Weeks 6 to 9. Confirmatory diligence, third-party reports, FX and cash management setup, draft facility agreements.
- Weeks 10 to 12. Conditions precedent, security perfection steps, account control, and funding. Cross-border approvals can extend the long-stop date; plan contingency time.
Post-Close Governance And Reporting
Lenders request monthly management accounts, quarterly covenant testing, and a board calendar that covers capex, customer exposure, and FX performance. Cash sweeps apply once thresholds are met. Many facilities include KPI-linked step-downs in the margin when the plan delivers, which lowers carry for the sponsor and encourages operational discipline.
Common Risks And How Sponsors Address Them
Documents To Prepare For A Competitive Process
- Teaser and sponsor track record with references.
- Confidential information memorandum and five-year model with scenarios.
- Detailed sources and uses with currency breakdown and fees.
- Legal structure chart with jurisdictions, tax notes, and dividend path.
- Draft term sheet for seller note and any earn-out mechanics.
- Compliance pack for KYC, sanctions, and ownership disclosure.
How We Assist Sponsors
- Holdco–opco architecture, security path, cash control, and FX plan that pass credit review.
- Debt mix across senior, unitranche, mezzanine, and preferred equity. Clear intercreditor terms.
- Seller note and earn-out language that protects cash while aligning incentives.
- Targeted distribution to banks, private credit, family offices, and placement platforms.
- Two to three comparable proposals for clean files with disciplined fees and workable covenants.
- Management of third-party reports, legal comments, conditions precedent, and first funding.
Frequently Asked Questions
Request An LBO Funding Plan For An African Acquisition
Share a short overview of the target, country exposure, currency profile, and timeline. We will respond with a structure, a likely capital route, and a delivery plan to term sheets.
Start Your Acquisition Funding ProcessThis article provides general information for corporate readers. It is not legal, tax, or investment advice and it is not a commitment to lend or invest. Any transaction is subject to due diligence, know-your-customer checks, sanctions screening, credit approval, and final documentation.
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