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Time on the Road for Africa-Focused Private Equity Funds – November 2013

by Stuart Hunter

  • 04 Nov 2013
  • PE

So far in 2013, 14 private equity funds with a main geographical focus on Africa have reached a final close according to Preqin’s Funds in Market product, collectively raising aggregate capital commitments of just over $2bn. Despite there being two months left until the end of the year, 2013 has already surpassed the total $1.8bn amount garnered by the 17 Africa-focused funds that reached final close in 2012. With 76 funds in market following a similar geographical focus targeting an aggregate $16.6bn, the fundraising figures for 2013 have potential to match the levels seen in 2011, when 19 funds managed to collectively raise $2.9bn.

The average number of months it has taken for predominantly Africa-focused funds to reach a final close increased by six months between 2011 and 2012. The average time it has taken to reach a first close has also increased, with the average GP taking 10 months in 2011 compared to 12 months in 2012. This suggests that the time it takes to reach a first close has a significant knock-on effect on the remaining time it takes to reach a final close. So far in 2013, the average time on the road has fallen; Africa-focused funds have been taking an average of nine months to reach a first close and 26 months to reach a final close. In the whole of 2012, the two funds that took the shortest length of time to reach a final close were Actis Africa Real Estate Fund 2 and RMB Westport Real Estate Development Fund, both taking 22 months.

Actis Africa Real Estate Fund 2 is dedicated to investments in real estate companies and projects in Sub-Saharan Africa. The $278mn fund is Actis’ second Africa-focused real estate fund and managed to collect $28mn more than it originally targeted. RMB Westport Real Estate Development Fund is RMB Westport’s first real estate fund and targets opportunities arising in Sub-Saharan Africa, particularly in Ghana, Nigeria and Angola.

The average percentage of the target size raised at a first close for private equity funds with a main geographical focus on Africa has, to date, remained below the peak of 54% reached in 2009. It comes as no surprise that data for predominantly Africa-focused funds closed in 2013 YTD shows that the average percentage of the target size collected at the final close date has fallen from 79% for funds closed 2012, to 67%.

So far in 2013 the only two funds to have exceeded their target size are CapitalWorks Private Equity Fund II and Ethos Private Equity Fund VI, that raised $270mn and $800mn respectively. CapitalWorks Private Equity Fund II, managed by CapitalWorks Equity Partners, makes growth investments in South Africa, with a small proportion of the fund investing in Sub-Saharan Africa. Ethos Private Equity Fund VI managed to raise $50mn more than the previous fund in the series and focuses mostly on control acquisitions and expansion capital in medium-to-large companies in South Africa, and selectively in Sub-Saharan Africa.

 

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