Africa Remains Growth Opportunity

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    Africa remains one of the world’s growth opportunities for private equity investors, even though the market has already surged dramatically over the past decade and several economies face serious challenges, says a report from the Boston Consulting Group (BCG). To generate the high returns that investors expect, however, funds should consider more flexible investment strategies and new types of corporate targets. ‘Why Africa Remains Ripe for Private Equity’ says since the early 1990s, the number of private equity funds active in Africa has swelled from about a dozen to more than 200, while funds under management have risen from some $1 billion to upwards of $30 billion. This rapid growth, combined with the recent downturn in Africa’s largest economies, has raised concerns among some analysts that a bubble is emerging. Alternative investment approaches are particularly important if funds are to meet the rising expectations of their investors. Private equity investors should consider other investment approaches, such as majority stakes, strategic partnerships, and evergreen funds, rather than only funds with timing constraints for divestiture. It also suggests that funds look at a wider range of targets, such as Africa’s growing pool of dynamic smaller companies with significant growth potential.