African private equity fund raises record $1 billion
Helios Investment Partners says "private equity in Africa is maturing".Helios Investment Partners, a private equity fund focused on Africa, has for the first time raised more than $1billion (£850 million).
The London-based group
said the record size of the fund signals the growing appetite for the continent.
Although it experiences strong economic growth, Africa has been struggling to attract private equity and international investment capital.
About $300 billion was raised globally for private equity in 2013, but only three per cent ($1.2 billion) went to Africa-focused funds, said Mike Casey, the director of EMPEA Consulting, quoted by Ventures.
"The biggest challenge global institutional investors see when they approach Africa is the lack of established fund managers," he said.
Although more institutional investors are pouring money into private equity funds for Africa, some remain worried about their exit strategy as many capital markets in the region are still in their infancy, according to the Financial Times.
But David Ashiagbor of the Making Finance Work for Africa (MFW4A) said the rapid growth of the Pension Fund industry could provide a great source of capital for the private equity industry.
Tope Lawani, Helios co-founder, said in an interview with the Financial Times that the size of the capital rising and the participation of pension funds and sovereign wealth funds was a sign that "private equity in Africa is maturing".
He said that in the near term many African countries were going to suffer an "adverse impact" on their currencies as capital flew back to the US in a context of sharply lower commodities prices.
But he claimed that the downturn would turn into an opportunity for investors holding large amounts of US dollars, such as Helios. “It is an excellent time to invest: asset values are going to come down," he concluded.