While fears grow over emerging markets, a survey conducted by emerging market specialist adviser RisCura has shown that Africa is the preferred destination of many private equity (PE) firms in this area. There has been talk for a long time that Africa is the next big PE opportunity, and now there is clear evidence that the continent is set to be exploited by firms everywhere.
What Makes Africa Attractive?
Projected growth forecasts being more promising than elsewhere, including developed countries, is the main reason Africa is seen as so attractive. In fact, a recent Financial Times report that we carried here at DealMarket Blog, which was based on a piece of research conducted by Ernst & Young, demonstrated that the lesser developed African nations are actually delivering better returns for investors.
Add in the well-reported opportunities that are available in the countries where infrastructure and foundations are in place, such as Kenya, and Africa has a real opportunity to become a true “jewel in the crown” of the whole PE marketplace and potentially the global economy over the next 20 – 30 years.
Rory Ord, of RisCura, told Business Day Live, “The results of the research show that a majority (70%) of institutional investors surveyed believe Africa is more attractive than other emerging markets.”
What was also notable from the survey was that, for the first time, investors who are considering Africa are looking more at economic sectors, whereas in the past the first port of call would be an assessment of the individual nations where investment might be an option.
Ironically, it is areas that are often seen as attractive elsewhere around the world, such as mining and real estate, that are deemed the highest risk in Africa, with investors likely to be targeting consumer services and products, as well as the continents developing energy and technology markets.