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Too Many Going After A Few Big Private Equity Deals In Africa

Too Many Going After A Few Big Private Equity Deals In Africa

Africa’s private equity market is overcrowded with too many people going after the same few large deals, but there’s a lot of opportunities in smaller deals, a stakeholder says.

Nick Tims is managing director of the client group at U.K.-based Investec Asset Management. Its main markets are U.K., South Africa and Australia. As African private equity markets evolve, the sweet spot is to be found in the smaller deals, Tims said, according to a report in BizNews.

“Many private equity fund buyers have increased their own direct investment programs, especially development finance institutions and also the dedicated African funds. In many cases they are all looking at the same small number of available deals,” Tims said.

Smaller markets are the sweet spot for private equity opportunity on the
continent, Tims said. “The overall picture is still one of an undeveloped asset class in a huge opportunity set.”

Tims’ report, “Private Equity in Africa: The Challenges and the Promise,” examines increased private equity investment in Africa. He examines a marketplace where substantial capital is raised by both established African companies and by new entrants.

The new phenomenon is the appearance of global private equity players – global behemoths looking to allocate to Africa – alongside larger fund raisers by traditional players and South African players extending their mandates north of the border, BizNews reports.