Business Day
*Private equity growing in Africa* *Sure Kamhunga, Business Day, Johannesburg, 18 October 2011 *STANDARD Bank has joined a growing list of institutions painting a rosy picture of the increasing flow of private equity funds into Africa.
The bank yesterday predicted this growth would be maintained in sub-Saharan Africa over the next 12 months as global investors rush to gain access to one of the fastest-growing emerging economies in the world.
This is in sharp contrast to Europe, where bankers have reported a lull in the flow of both private equity funds and deals as funders stick to the sidelines due to growing uncertainty about the debt crisis in the periphery euro-zone economies. Most private equity deals in Europe and the US were highly leveraged and economic conditions were making it tougher to raise debt funding, Ernest January, a director at Medu Capital, told Business Day recently.
But Africa's potential was fuelling the appetite for private equity funds who did not want to be left behind. Estimates by organisations such as the World Bank and the International Monetary Fund suggest that sub-Saharan Africa would achieve some of the highest growth rates over the next five to 10 years.
Yesterday, Standard's director of diversified lending and leverage, Brian Marshall , said Africa had turned into the place to be for many investors seeking growth markets.
He said private equity funds would form the bulk of investment flows into Africa over the next 12 months. Despite the funds available to invest in Africa being still small relative to the size of global funds, any increase in investment flows into Africa was good because it provided local firms with much-needed capital, he said.
Mr Marshall quoted an industry body for private equity funds, which showed that funds had raised nearly $1,5bn for sub-Saharan Africa last year, an increase of 55% over 2009's figure. "Opportunities in emerging markets , and sub-Saharan Africa, in particular, are expected to fuel a pipeline of deal activity in the next 12 months," said Mr Marshall.
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