Africa: Fundraising Pauses but Exits Ramp Up
Posted On: 25 Aug 2017 | Private Equity International
By Graeme Kerr | 22 Auguest 2017
1. UNCERTAINTY IS TAKING ITS TOLL
The “Africa Rising” narrative appears to have paused for breath as macro shocks and political uncertainty in the continent’s major economies take their toll. Fundraising fell to $1.95 billion in 2016, down sharply from the $4.26 billion raised in 2015, according to Private Equity International data. Just 50 percent of the funds that have closed so far this year have met their targets.
On the plus side, there is clear evidence of a maturing private equity market. Last year there were a record 48 exits with secondary buyouts at an all-time high. Typical was Abraaj Group’s buyout of coffee chain Java House Group from Emerging Capital Partners in July 2017 which had 12 bids, many from other GPs.3. ALL EYES ARE ON EAST AFRICA…
“Fund managers are looking further afield given the economic trouble in Nigeria and South Africa,” says Jeff Schlapinski, director of research at the EMPEA, with East Africa and Kenya proving “very popular for investment”. There’s a big focus on infrastructure deals, he says.
4.…AND THE FRANCOPHONE REGION
“Francophone West African countries such as Côte d’Ivoire, Mali and Senegal are receiving increasing interest, due to their currency peg. The shift comes after the currency devaluation prompted some cautiousness from the investment community in Nigeria, the dominant force in West African private equity,” says Enitan Obasanjo-Adeleye, head of research at the African Private Equity and Venture Capital Association.
5. EDUCATION GETS ‘TOP MARKS’
Growing demand for skills from Africa’s growing middle class has seen a rash of deals in the education sector. Growth market investor Actis is the latest to expand its campus network with its deal announced in July to add three universities in Morocco and South Africa to its pan Africa network Honoris United Universities. “The emergence of the middle class has helped drive demand for education,” says Sofiane Lahmar, partner at Development Partners International, another investor in the university sector.
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