The total value of private equity deals in Africa in 2014 hit $8.1 billion, the second-highest level on record.
Fueled by population growth and increased political stabilization, global PE interest is rising on the continent. Last year’s total was just shy of the 2007 record of $8.3 billion, according to African Private Equity and Venture Capital Association (AVCA). The figure is also a stark improvement over the $4.3 billion and $2 billion distributed in 2013 and 2012, respectively.
Despite the lofty figure, three companies were responsible for $5 billion for the total.
These companies include Nigeria-based IHS; Azura Power, an energy firm founded by Nigerian and U.K. entrepreneurs; and George Soros-backed Helios Towers Africa.
Approximately 20% of private equity firms are “now expressing serious interest in investing in Africa,” private equity veteran Marleen Groen told The Daily Star in Lebanon. “[Africa] offers investors less competitive investments in a diversified market where many countries show ongoing GDP growth of over 7% per annum.”
The Emerging Markets Private Equity Association also suggests that the continent’s pension fund industry could become a significant source of investment in the coming decade. The trade group projects that pension funds in 10 large African economies are valued as high as $379 billion. The group projects that up to $30 billion could be shifted to private equity investment.
Consulting giant McKinsey sees higher potential.
In 2014, the firm projected that assets invested into African private equity deals could top $50 billion over the next decade, with most of the capital directed to the continent’s most developed and liberalized economies.
Source – Finalternatives