Atta Africa Financial Update

Executive summary
South Africa still dominates private equity exits.

Close to half of the private equity exits in Africa come from SA, but this number is set to decline over time as investors put money in higher-growth economies elsewhere across the continent.

Based on numbers recently published by Ernst and Young, of the last 40 private equity exits in Africa, 19 have been from SA, 5 in Kenya, 3 in Nigeria and the rest in various countries such as Ghana, Uganda and Cote d’ Ivoire. This reflects the historic sentiment for private equity across the continent as many of these investments were made between six and seven years ago.

Over the next half decade, the numbers will almost certainly shift as many feel private equity, with its combination of capital and management expertise, is the perfect fit for Africa. It allows investors who want to contribute to and benefit from Africa’s growth to find a way in; it helps innovative and dynamic African companies who need capital and experience.

The "Africa Rising" story is a well-rehearsed one, and one that is circulated infinitum around conferences and forums. But its drivers – the demographic boosts from a youthful population, mineral wealth that will outlast a period of low commodity prices, growing disposable income, yield at a time when little can be found elsewhere – remain extremely potent.

And it’s not all about commodities: especially in East Africa, today fund managers are increasingly excited about consumer, financial service and energy plays.

New York pension fund expected to invest billions in Africa

  • The New York State Common Retirement Fund, one of the largest US Pension funds and worth about US$180 billion, plans to invest as much as 3% of its assets in Africa in the next five years to diversify its portfolio and boost returns
  • The total available capital could be more than US$5 billion based on the fund’s current valuation
  • African private-equity firms, venture capital, real estate and new infrastructure projects such as power plants are likely to receive funding according to the CIO

Duet looking to invest in the African leisure sector

  • The Duet Group is looking to invest in the African hotel sector through a joint venture with Bouygues
  • The partnership is aiming to raise an initial €178.6m (US$200m) for the venture, which will develop, design, build, own and operate a portfolio of internationally branded hotels in sub-Saharan Africa
  • Duet and Bouygues will contribute 20% of equity raised