Africa Attract US$1.1Billion Private Equity Finance In 2012

A recent survey carried out by Lagos-based private consulting firm, KPMG, has revealed that in 2012, African countries attracted US$1.1 billion private equity (PE) finance in 2012.

According to the Emerging Markets Private Equity Association (EMPEA) report, about $1.1 billion of new investments were made in sub-Saharan Africa (SSA), in 2012, and about $1.4 billion was achieved in fund raising.

It revealed that about 25.7 billion rand (US$3.03 billion) in PE fund from Africa was returned to investors in 2011, up from R18.1 billion in 2010.

South Africa is where about 40-50 per cent of all Africans PE funds are currently invested, followed by Nigeria.

Although Africa’s private equity (PE) landscape is uncharted and at its infant, it is growing steadily and giving good returns.

Partner in charge of Corporate Finance & Financial Advisory Services, KPMG, Nigeria, Dapo Okubadejo, said, “Africa is now viewed by PE houses and fund managers as a priority investment destination. As growth in other economies have slowed in recent years due to the 2008/9 recession and current crisis in the Eurozone, investors have been looking to emerging markets and economies that will provide higher return rates and Africa is continuously proving its business case for investment.”

“We are seeing growing interest and activity from both international and African-based PE investors, in raising funds and targeting a range of markets and investments opportunities - including energy and natural resources, infrastructure, consumer goods, financial services and the entire agriculture value chain for instance – that capitalise on Africa’s growth opportunity,” he said.

He added that, “Whenever we speak with investors or potential investors about Africa, we always advise that Africa is about having the right risk-versus-reward approach. It is true that Africa faces many risks and challenges ranging from weak infrastructure, government bureaucracy and weak legal and regulatory framework especially the judicial system, but with a long term investment horizon, the risks can be broadly evaluated against significant growth potentials and investment incentives available to investors in many African countries.”