Africa’s Thriving Private Equity Landscape – September 2015

by Kathryn Sharpe

  • 16 Sep 2015
  • PE

The African private equity market is flourishing. According to Preqin’s Funds in Market online service, Africa-focused private equity fundraising in 2015 YTD is at its highest level since the peak of 2007, when $5.1bn was collected. Aggregate capital raised so far in 2015 stands at $4.1bn, buoyed by final closes held by some experienced managers known for investing in the region, including Helios Investment Partners, The Abraaj Group and Development Partners International. Combined, these managers have attracted 78% of the capital raised for private equity investment in Africa so far this year. The average size of Africa-focused private equity funds closed so far this year stands at $339mn, significantly higher than the previous record of $204mn in 2007.

Promisingly, fundraising momentum has dropped sharply from an average of 30 months spent on the road in 2014, to just 14 months in 2015 YTD, the lowest average since 2007. From 2007 to 2015 YTD, growth vehicles have raised the largest amount of capital ($8.9bn) of all Africa-focused private equity funds. This was some way ahead of buyout funds, with these vehicles accumulating $5.9bn, while venture capital funds raised $2.2bn.

The largest Africa-focused fund to close so far this year is Helios Investors III, a growth vehicle that held a final close at $1.1bn in January. The firm to have collected the most capital focused on Africa this year, however, is The Abraaj Group. Abraaj Africa III raised $990mn, exclusively investing in Sub-Saharan Africa, including South Africa-based mid-market companies within the consumer-facing sector. In addition, the firm also closed Abraaj North Africa Fund II in August, having raised $375mn for growth investments primarily focused on the pharmaceuticals, information technology, agri-business and industrials sectors, specifically targeting businesses in Algeria, Morocco, Egypt and Tunisia.

The strength of Africa-focused private equity fundraising so far this year suggests investors are dedicated to increasing the amount of capital allocated to the region. There are 88 funds in market with Africa as a primary focus, targeting $18bn; despite headlines of instability and a lack of opportunities for large deals in the region, this year may top the fundraising levels seen in 2007.

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