Business
Private equity investors jostling to take advantage of growing opportunities in Africa
Investors are forming partnerships and increasing manpower to take advantage of the opportunities for private equity investors in sub-Saharan Africa.
A private equity value chain is beginning to form as funds focus their sights on returns from Africa’s economic growth.
At the small end of the scale, Fidelity Capital Partners, a Ghana-based fund manager, changed its name to Jacana Partners in August as part of a move towards a merger with the UK- based firm of the same name.
“It’s a rebranding, the intention to legally merge is there,” said Jacana chief executive Simon Merchant, indicating the merger would take place at the same time as fundraising from international investors for a new US$75 million sub-Saharan Africa fund next year.
The new fund will make investments of between US$1 million and US$5 million, continuing Jacana’s focus on small- and medium-sized investments.
It uses a combination of veteran private equity investors acting as mentors alongside African investment managers.
It has US$45 million under management with US$20 million invested so far in West and East Africa, including in two funds managed in partnership with Fidelity.
Merchant says their strategy is “to invest in equity where we think there is interest in strategic acquirers,” including other private equity funds.
“Ultimately the whole value chain needs to be filled. We see the larger funds as exit opportunities for us,” says Merchant.
These large funds are beginning to hover over the continent.
In August, Bloomberg reported that KKR & Co, one of the giants of US private equity, is recruiting an executive in London to focus on Africa.
Carlyle, another US private equity fund, is in the process of raising US$500 million for a fund to target sub-Saharan Africa.
In 2011, managers raised US$1.3 billion for the region, with another US$489 million raised in the first half of 2012, according to the Emerging Markets Private Equity Association.
After a dip in 2010, investments are also rising, with just more than US$1 billion invested in 2011 and another US$605 million invested in the first half of 2012
Source: The Africa Report