OMERS-Backed Fairfax Africa Holdings Merges with Helios Holdings Group
Posted on 07/12/2020
Fairfax Africa Holdings Corporation is a listed company that is an investment holding company. Fairfax Africa Holdings has an objective to make investments in African businesses. Fairfax Africa Holdings’ ultimate parent is Fairfax Financial Holdings Limited. Fairfax Africa’s subordinate voting shares trade on the Toronto Stock Exchange under the symbol FAH.U. The multiple voting shares of the company are not traded.
On July 10, 2020, Fairfax Africa Holdings Corporation agreed to merge with Helios Holdings Limited, an Africa-focused private investment firm.
The Helios Holdings Group will contribute certain economic streams (from the management and performance fees arising from current and future Helios funds) to Fairfax Africa in exchange for a 45.9% equity and voting interest in the pro forma share capital of Fairfax Africa. On closing of the transaction, Fairfax Africa will be renamed Helios Fairfax Partners Corporation and continue to be listed on the Toronto Stock Exchange. The current carried interest incentives for Helios’ investment professionals remain in place and the all-share transaction ensures strong alignment between the investment team, Limited Partners of Helios’ funds and the shareholders of Helios Fairfax Partners Corporation in delivering strong and sustainable performance across all parts of the combined business.
Prem Watsa’s Fairfax Financial Holdings Limited will retain voting control of the combined entity.
Significant shareholders of Fairfax Africa are OMERS Administration Corporation (Ontario Municipal Employees Retirement System) and Fairfax Financial Holdings Limited. These shareholders account for approximately 65.7% of the total votes attached to the subordinate voting shares of Fairfax Africa.
Tope Lawani and Babatunde Soyoye are the co-founders and Managing Partners of Helios Investment Partners LLP which was formed in 2004. Helios Investment Partners LLP oversees the Helios funds, which includes the Nigeria Sovereign Investment Authority as a fund investor. Tope Lawani and Babatunde Soyoye will become co-CEOs of the newly-merged company, while current CEO of Fairfax Africa, Michael Wilkerson, will become the Executive Vice Chairman of the newly-merged entity. Upon closing, Helios Investment Partners LLP will be appointed sole investment adviser to Helios Fairfax Partners Corporation.
Current investors in Helios’ latest fund, Helios IV, include CDC Group (the UK’s development finance institution) and the International Finance Corporation (a member of the World Bank Group).
Additional Transaction Details
Fee streams contributed by Helios Holdings Group consist of:
1. 100% of excess fees, defined as all management and other fees paid to Helios or any of its affiliates in connection with the management of any existing or future fund (including the management of Helios Fairfax Partners Corporation and its subsidiaries) less expenses, administrative fees or other fees necessary for the operation of managing those funds,
2. 25% of all carried interest amounts generated by any existing private equity fund managed by Helios or any of its affiliates, excluding Helios IV, and
3. 50% of all carried interest amounts generated by any future fund managed by Helios or any of its affiliates, including Helios IV.
McCarthy Tétrault LLP is legal advisor to Fairfax Africa and Fairfax Financial. Alvarium MB (UK) Limited is financial advisor and Goodmans LLP is legal advisor to the Special Committee.
Lazard is financial advisor and Kirkland & Ellis LLP and Stikeman Elliott LLP are legal advisors to Helios Holdings Group.
Other key parts of the deal include Fairfax Financial buying Fairfax Africa’s equity stake in Atlas Mara Limited for an aggregate purchase price of US$ 40 million. Fairfax Financial will also be guaranteeing the repayment of amounts drawn under a US$ 40 million secured credit facility made available by Fairfax Africa to Atlas Mara. Atlas Mara was founded on November 28, 2013 by former Barclays plc Executive Bob Diamond and entrepreneur Ashish Thakkar through Atlas Merchant Capital LLC and Mara Group Holdings Limited as their investment vehicles respectively.