Private Equity Strong interest in Africa due to accelerated growth

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  play (Journal Record)

Africa in this present age has arrived on the global economic landscape because close to 35% of African countries are growing more than 6% annually. The increase is driven by the following an expanding middle class, improved business environment, and increasingly stable political democracies.

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From Ernst & Young’s 2013 analysis on Africa Private Equity industry, the following key findings were highlighted:

  • $3.2 bn was invested in 98 Private Equity investments

  • $3.3 bn was raised through Private Equity funds

  • Local Partners rated Africa as the most attractive emerging market

  • Half of all African countries (27) are now “middle income” countries

  • Unique Private Equity investment strategies and platforms are evolving

The shift in global investor interest to Africa is because of its strong long-term growth fundamentals. From 2000 to 2011 Africa had the highest number of economies growing above 7% per annum. This prompted IMF to predict that African countries are likely to post relatively higher economic growth rates compared to some developed and emerging nations. According to IMF, between 2011 and 2015, 7 out of the 10 fastest-growing economies in the world will be in Africa, and by 2017 that number will grow to 11 out of 20.

  play (Ernst & Young)

The continent is steadily developing into an investor friendly terrain which accounts for the influx of Equity Investment. Sub-Saharan countries outside South Africa, such as Ghana, Kenya, Nigeria, Cote d’Ivoire, and Uganda are attracting increasing investor interest.

Due to the attractiveness there are major Private Equity companies already investing in Africa who are willing to increase their investment while new ones are coming on board e.g. companies like Abraaj of Dubai, Carlyle of US, Brait, Helios, AfricInvest, Edmond de Rothschild, KKR and Blackstone, just to mention just a few.

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