Private Equity investment in Africa soars
The value of global private equity deals targeting Africa has more than doubled (137 per cent) in the first half of 2014 compared to the same period last year, according to new research.The value of global private equity deals targeting Africa has more than doubled (137 per cent) in the first half of 2014 compared to the same period last year, according to new research.
"The increasing interest from the biggest funds is partly as a result of increased risk tolerance, and partly because they’re seeing others do deals in Africa," said law firm Freshfields Bruckhaus Deringer, who led the study.
Global PE funds completed 15 deals collectively worth $1.5 billion (€1.2 billion) in the period between January 1, 2014 and June 30, 2014, up from 10 deals totalling $621 million in the first half of 2013.
In addition, PE firms based both domestically and globally invested
$4.26 billion last year, more than at any point since the global financial crisis.
Freshfields corporate partner Pervez Akhtar said that the PE market quieted down significantly during the downturn but is now picking up, because many firms have funds that have not been deployed.
He added they are looking for new markets that will give them a growth story, adding that some of the returns in Africa are "staggering" compared to those in developed market economies.
"There will be a few bumps in the road, like there always are in emerging markets. But while political risk in Africa remains, the situation gets easier as more deals are done; the lending banks begin to understand the market, and regulators and tax authorities become more familiar with private equity investors," the report concludes.