Monday 11 December 2017

Methodology

Africa Assets data has been collected from press releases, third party news sources and through conversations with GPs, LPs and other industry stakeholders. The information is subjected to a rigorous collection and verification process. However, we cannot guarantee that it is completely comprehensive or accurate. If you are aware of gaps or inaccuracies in our data, please tell us. Our database is constantly improving and evolving thanks to the dedication of our research staff and input from our readers.

Defining PE/VC for Africa

The Africa Assets database captures fundraising, deals and exits activity for private equity and venture capital (PE/VC) GPs targeting sub-Saharan Africa. These are investment managers that raise a blind pool of third party capital to invest in private companies and add value for growth with a medium-term (normally three to five years) exit horizon. Because private equity is a relatively new asset class for Africa, we also track a variety of non-traditional GPs that exhibit different fundraising and investment strategies in an effort to adapt to the unique needs of African markets, including:

  • On-balance sheet or otherwise "captive" GPs that make PE/VC investments on behalf of a bank, investment firm, corporation, family office or other parent investor. In these cases, the pool of capital comes entirely or mostly from the single parent investor;
  • GPs that pursue opportunity-specific or “deal-by-deal” fundraising rather than blind pool funds.
  • VC firms that focus on business incubation or work with business incubators to develop new companies;
  • Funds of funds;
  • Project finance, infrastructure and real estate investments made by PE/VC firms;
  • Investments made and exited by holding companies according to a PE model;
  • Private investments in public equities (PIPE deals).

Geography

Africa Assets’ fund database captures information about any PE/VC fund that invests in sub-Saharan Africa, regardless of where the fund is domiciled or where the GP that manages the fund is based. Our deals and exits database captures any PE/VC investments made in a company or project based in sub-Saharan Africa. Due to regional economic integration in Africa, many portfolio companies operate across several countries, sometimes without an obvious single-country base. That information is captured in our database. Companies that operate across both sub-Saharan and North Africa are included in the database. On a case-by-case basis we also track investments that are made in companies based outside of sub-Saharan Africa that have raised PE capital for expansion in sub-Saharan Africa or to fund a specific project in the region.

Regions

Fund and investment activity is tagged by region and country, according to the following categories:

  • Sub-Saharan Africa: all of Africa, excluding North Africa
  • North Africa: Algeria, Egypt, Libya, Morocco, Sudan, Tunisia, Western Sahara
  • West Africa: Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo
  • Eastern Africa: Burundi, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Somalia, South Sudan, Tanzania, Uganda
  • Central Africa: Angola, Cameroon, Central African Republic, Chad, Democratic Republic of Congo (DRC), Equatorial Guinea, Gabon, Republic of Congo, São Tomé and Príncipe
  • Southern Africa: Botswana, Comoros, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Zambia, Zimbabwe

Sectors

Fund and investment activity is also tagged by a variety of sectors and sub-sectors that have been outlined in order to best capture PE/VC trends specific to sub-Saharan Africa. Of course, many investments and fund focus areas cross over multiple sectors, which requires an imperfect categorization scheme. Some difficult distinctions worth noting:

  • Services: most services have been broken down according to their relevant sector categories rather than put in a separate services category: e.g. infrastructure support services is included under infrastructure; business process outsourcing is included under IT-technology; education is distinct sector, etc.
  • Agribusiness: covers most all activities and services related to agriculture, including activities that could be easily classified under a separate sector: e.g. agro-processing (which is sometimes labelled as manufacturing; note that some companies that produce a variety of fast moving consumer goods, including some food items, but which focus less on agro-processing are classified under manufacturing). This distinction was made in recognition of the importance of the agribusiness category to African development and its popularity amongst PE investors.
  • Health Care: covers most all activities and services related to health care, including health insurance and pharmaceutical manufacturing. These sub-categories are included under health care rather than under financial services or manufacturing respectively, in recognition of the growing importance for Africa of health care and health care services as a distinct sector.
  • Telecommunications: has been separated as a distinct sector that includes telco companies, telco infrastructure and telco support services. Other ICT-related companies are categorized under the IT-technology and media sectors.
  • Energy: upstream oil and gas activities as well as downstream retail provision are included under the extractive industries sector, while energy projects such as power plants and electricity distribution are included under the infrastructure category.

Fundraising

We track funds raised according to officially announced closes. Rolling and captive fundraising is captured as funds raised or allocated year-to-date.

Currency

All fundraising and investment amounts are reported in USDm. Where a fund has been raised or deal done in another currency, the type of currency is noted in the database. Conversion calculations are made using market forex rates at the time of a fundraising close or deal, as provided by Oanda. Fundraising and investment amounts in original currencies are available upon request.

Data Aggregation

These methodology notes refer to the line-by-line information on PE/VC funds, deals and exits presented in our database. Africa Assets does not at this stage provide top line, aggregate data on fundraising and investment totals. However, we are working hard to develop an aggregation program in order to extract quarterly reports from the fundraising and investment data that we track. This service will be available in 2012.

LP Activity

Africa Assets does systematically track LP commitments to PE/VC funds. We are in the midst of building a searchable LP activity database, which will be available to subscribers soon.