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Overview of African Private Equity - (English)
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Overview of African Private Equity - (English)

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  • 1. The African Private Equity A situational overview …by
  • 2. 2 Worldwide pattern for Private Equity development… Developed markets Markets for Private Equity growing interest 2000 2009 Source : IFC – AVCA Conference Cairo Nov. 2009
  • 3. 3 a fast growing interest for African Private Equity… 0 10 20 30 40 50 60 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Numberoftransactions millionsUSD Funds raised vs. Invested Funds Funds Raised Invested Funds Number of transactions 0 20 40 60 80 100 120 janv.-04 mai-04 sept.-04 janv.-05 mai-05 sept.-05 janv.-06 mai-06 sept.-06 janv.-07 mai-07 sept.-07 janv.-08 mai-08 sept.-08 janv.-09 mai-09 sept.-09 janv.-10 mai-10 sept.-10 janv.-11 Google Insight: Occurring result for the search of term "African Private Equity" Source : Google insight – mars 2011 Source : EMPEA – Rapport Annuel 2010
  • 4. 4 SOUTH AFRICA SWAZILAND LESOTHO SIERA LEONE Private Equity Activity  High  Medium  Low … with a potential for more development Source : Kusuntu Research Jan. 2011 40% 25% 20% 3% 12% Funds breakdown bystyle Capital Expansion Funds Generalist Funds Infrastructure Funds Real Estate Funds Others Source : EMPEA – Annual Report 2010 Source : Kusuntu Research Mar. 2011 0% 5% 10% 15% 20% 25% 30% 35% Technologies Consumer goods Health Care & Medical Sciences Agribusiness Media & Telecom Services Infrastucture Industries & Manufacturing Others Energy & Natural Resources Banks and Financial Services Number of transactions Size of transaction
  • 5. 5 … mainly funded by Development Finance Institutions… • About 200 Private Equity teams managing or raising funds • Exception made of South Africa, key Africa Private Equity sponsors remain the DFI’s • Bigger contributors to date are FMO, CDC, Norfund, Bio along with the IFC and the African Development Bank • Recent funds raisings show appetite from Non DFI’s investors African PE Funds resources per origin 60% 15% 20% 5% DFI's Non African LP's African LP Domestic Investors Source : Kusuntu Research Mar. 2011
  • 6. 6 …African Private Equity funds range very large… • Geographical focus – Global funds with an allocation to Africa – Pan-African funds – African regional funds – Domestic Funds (Nigeria/South Africa) • Funds Size • Segment 1 – AuM* > $ 0.5 bn (even > $1.0 bn) • Segment 2 – $ 0.3 bn < AuM* < $ 0.5 bn • Segment 3 – $ 0.1 bn < AuM* < $ 0.2 bn • Segment 4 – AuM* < 0.1 bn (*) AuM : Assets under Management
  • 7. 7 … with a high concentration of small funds… $ 1 bn $ 0.5 bn $ 0.25 bn Regional Funds Pan-African Funds Global Funds Source : Kusuntu Research Mar. 2011
  • 8. …funds are not the only way to invest • Historical DFI’s sponsored actors have used funds or investment companies as a vehicle • Recent teams, sourcing funds from non DFI’s or opportunistically, have favored Club Deal SPV’s to yield quicker track record • Direct investments is also taking off 8 Source : Kusuntu Research Jun. 2011
  • 9. 9 … an industry that is being organized • AVCA : African Venture Capital Association – Represents the African Private Equity and Venture Capital industry and working to implement across the profession international standards – Composed of full and associate members, even individuals, as far as they act for the recognition and the development of the African PE / VC – Natural partners between professional and policy maker to have necessary changes happen to develop Africa through Private Equity Investment – Organize • The Annual Conference of the association, • Promotional events on key African PE VC topics • Training – Edit and publish • Educational material as well as documentation supportive to it actions
  • 10. …a development led from multiple poles • Advanced Private Equity place – Maghreb-French Speaking African Pole • Casablanca, Tunis – Nile-Eastern African Pole • Cairo – Southern African Pole • Johannesburg • Emerging Private Equity Place – West Africa • Abidjan, Accra, Lagos – East Africa • Nairobi • Non Regional Center – Northern American Pole • Montréal, New-York, Washington – Europe and Middle-East • Dubai, Londres – Asia • Singapour 10 SOUTH AFRICA SWAZILAND LESOTHO SIERA LEONE Source : Kusuntu Research Jan. 2011 - Advanced PE VC center - Emerging PE VC center
  • 11. …a question of where to domicile African Private Equity Funds… • Choice of domicile is guided by two factors – Investment rules/constraints – Tax requirement by LP’s • Key domiciles Re: Investment constraints – Botswana – Mauritius – South Africa – WAEMU countries • Key domiciles Re: LP’s tax requirements – Mauritius – Luxembourg – Delaware 11 Tax transparency - +InvestmentDomicileconstraint Weighted by number of funds registered Source : Kusuntu-le-Club Research Nov. 2010 - + South Africa Botswana WAEMU Countries Mauritius Luxembourg Dubai
  • 12. a real growing interest worldwide 12 A fast growing meetings and conferences events on the themes of Direct Foreign Investment or Private Equity investing on Africa.
  • 13. …A barely touched opportunities • To the size of the continent, there are not enough PE/VC Funds • Existing funds are too small • Early stage funds vacum • Too many funds focus on capital expansion strategies • Investment pipe line is long to be full • An entrepreneurial potential that is still in it infancy • A PE / VC attractiveness limited to only few countries 13 Source : EMPEA – Coller Capital PE survey 2011 Factors likely to deter LPs from beginning to invest in individual emerging markets/regions over the next 2 years – % of respondents Private Equity certainly helps job creation, but « to create jobs, one must first create employers» Gonzague de Blignieres – BFM Business 17 may 2011
  • 14. An ocean of opportunities for the investors 14 Master Funds Feeder Funds Feeder FundsFeeder Funds Feeder Funds … numerous initiatives to draw the investors savings worldwide to African Private Equity Funds are impeded by regulatory barriers and costs that technology and adequate partnership would help remove… … in the favorable context where African Entrepreneur’s vitality need to be supported to create the tomorrow economic champions and subsequently create an increasing number of jobs and wealth to the benefit not only of the continent
  • 15. About Kusuntu  Kusuntu-le-Club is an Africa Diaspora executives and sympathizers partnership set up with the ambition to act connecting worldwide capital to frontier market economies, especially Africa.  Kusuntu-le-Club aims at providing leadership thought and act to promoting change and development in Africa through private equity investment.  Kusuntu-le-Club behaves as a Think Tank and advocacy group to promote Private Equity investment in Africa.  Kusuntu-le-Club actions take various forms such as public position taking, research publication, social networking or edition of an African Private Equity Directory. 15
  • 16. 16 Contact us • A LinkedIn Group : kusuntu-le-club • A Social Network : kusuntu.ning.com • A Directory of African Private Equity: kusuntu-partners.com • email : info@kusuntu.com
  • 17. “Imagination is more important than knowledge" Albert Einstein A foreword…