Africa remains one of the most attractive markets for private equity, says report
Despite the difficult economic context, Africa has many assets.Despite several economies on the continent facing difficulties, Africa remains one of the most attractive markets for private equity players, according to a new report from the Boston Consulting Group.
The document recalled that the number of active private equity funds in Africa went from about a dozen in the early 90s to over 200 currently, while funds under management increased from about $1 billion dollars to over $30 billion.
And despite the economic downturn caused by the steep drop in the price of commodities, the firm believes that the outlook remains positive for the private equity industry in Africa, especially because its penetration is still low.
The amount of private equity transactions and funds under management do indeed represent only 0.1 per cent of Africa's GDP, versus about one per cent in Western countries.
Moreover, macroeconomic fundamentals remain strong on the continent, with an economic recovery expected by analysts over the medium term, and the pool of companies that could be targets for investment funds is increasing.
The consulting group believes, however, that active investment funds in Africa need to adopt more flexible investment strategies and should target small and medium-sized enterprises.