African Private Equity Fundraising Breaks Records In 2015

By Kevin Mwanza Published: January 21, 2016, 9:46 am
Returns On SA Private EquityShutterstock

African private equity funds raised a record $3.89 billion  in 2015, a 51 percent  jump from the $2.57 billion they accumulated in 2014, according to data collected by Private Equity International.

This is a culmination of a success story that has characterized Africa’s fundraising scene, from funds targeting the continent to startups — mostly in tech, as global investor discover the allure of the region’s business opportunities.

Encouraged by political stability in a number of African countries led by a revolutionary win by an opposition presidential candidate in Nigeria, the continent’s largest economy, investors poured in capital into funds that operate in the region.

Traditionally, the continent’s abundance of natural resources, including mining and exploration, has been the driving force behind investment interest. But growing demand for telecommunications, infrastructure, consumer goods and financial services, has widened the range of opportunities for potential investors even further.

By the end of August, $3.78 billion had already been gathered from seven funds, almost a third more than the $2.57 billion accumulated during the whole of 2014 (see chart), PEI said in September.

PE in AfricaAmong those to close in 2015 was the Abraaj Group’s North Africa Fund II, which raised $375 million by August, $125 million above its target – its Africa Fund III had previously reached a final close at $990 million in March, having targeted $800 million.

These were both topped by Helios Investors III, which reached a hard-cap of $1.1 billion, having targeted $900 million.

2015 set another record in the number of private equity exits in Africa, with 40 announced by funds affiliated to African Private Equity and Venture Capital Association (AVCA).

According to AVCA’s recent study, about 249 private equity exits took place in Africa between 2007 and 2014.

“While South Africa continues to lead on exits, in the past few years there has been an increase in activity in other regions, such as east and southern Africa,” said Carolyn Campbell, managing director and founding partner at Emerging Capital Partners.

“African governments, realising the increasing potential of private equity investment, continue to implement business-friendly policies and reforms, as the changes in pension fund regulations show.”

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