Africa’s private equity market flush with cash

Other factors that have been attributed to the newly found attractiveness of Africa is an expanding middle class and increased efforts towards improving infrastructure.

The director of Actis East Africa, Michael Turner, says there is an unprecedented increase in the middle class in Africa as well as other emerging markets.

Fixing its hitherto largely dilapidated infrastructure is also making the continent more attractive to investors.

Mr Turner says that in future, Africa could overtake the Asian countries to climb onto the top of the tables and dominate the growth trends in the private equity markets.

Besides these factors, Hany Assaad, the chief investment officer in private equity at the International Finance Corporation, says there is a major improvement in the macro-environment in Africa.

This has made it market-based and also helped spur entrepreneurial activity, leading to a rapid sprouting of SMEs in the countries.

Consequently, the private equity fund managers have had a wide range of prospective clients to choose from.

Into the second half of the year, EMPEA forecasts more investments being channelled into Africa.

Though this confidence is expected to last the entire cycle of the year, EMPEA indicated that investors are somewhat cautious about committing new funds.

Nonetheless, the association’s president and CEO says fundraising levels are anticipated to rise, riding on the back of the more active investment environment.

“Prospective and undecided investors are looking for indications of improved liquidity to support the promise of managers’ ability to generate cash flow,” she adds.