South Africa Private Equity Performance Full Report
As in the previous years, the survey has three parts:
In 2013, investment activity has recovered from the 2012 slump: Private equity (PE) firms invested in 84 deals across sub-Saharan Africa in 2013 (2012: 58), and the values disclosed for 46 deals amounted to USD3.69bn, compared to USD1.13bn for 38 deals in 2012. Fundraising for Africa-focused PE funds was strong in 2013, totalling USD3.58bn. Nearly half of this is going to funds with a continent-wide mandate.
In our second AI Brief (02-2013), our main thematic focus is risk: What are the risks facing PE investors, how can they be managed, and are new investors at a disadvantage to the veterans?
Also in this edition:
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In this edition, we have begun to include the Northern, Western, Southern and Central African regions, although the focus is still on East Africa. This was done for two reasons: to give a pan African view of PE sentiment, and to capture the relative performance of the Eastern African region against other African regions.
As in the previous year, the survey has three elements:
Download the full survey here
2012 looks promising: The results of the second private equity confidence survey indicate that there is an increased appetite for investment in private equity ventures in East Africa. East Africa experienced a significant influx of private equity interest in 2011. New East Africa-focused funds are targeting high-growth small and medium enterprises in consumer-driven sectors. Investors have also begun to explore deals in new markets in Ethiopia, South Sudan and the Democratic Republic of Congo.
While investment sizes remain limited, several large deals were closed in 2011, and investors expect deal size to creep up over time. General partners with wider African mandates are also moving into the sub-region. These funds are active across infrastructure, real estate, health care, agribusiness and green energy, in addition to consumer-driven sectors. Venture capital (VC) funding is still scarce. However, Kenya has begun to stand out as an ICT hub, with help from technology incubators and increasing interest from local and international VC firms.
Many investors see East Africa’s strong growth potential as a driver of better investment performance than in South Africa: This is a huge shift in private equity attitudes toward Africa, which have been historically focused on South Africa. East African investment potential is seen as roughly on par with West Africa, where similar growth dynamics are at play.
Optimism brought about by positive changes in the East African private equity landscape has led to increased investor confidence. There is a dominant investment mood exhibited by GPs, and the survey indicates that the investment appetite is growing. As private equity enthusiasm continues to spread across Africa in 2012, East Africa will certainly be a hot spot to watch.