overview of african private equity - (english)
TRANSCRIPT
The African Private Equity A situational overview
…by
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Worldwide pattern for Private Equity development…
Developed markets Markets for Private Equity growing interest
2000
2009
Source : IFC – AVCA Conference Cairo Nov. 2009
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a fast growing interest for African Private Equity…
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500
1 000
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Funds raised vs. Invested Funds
Funds Raised Invested Funds Number of transactions
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Google Insight: Occurring result for the search of term "African
Private Equity"
Source : Google insight – mars 2011
Source : EMPEA – Rapport Annuel 2010
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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 by style
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 C on sumer goods
Health Care & Medical Sciences Agribusiness
Media & Telecom Services
Infrastucture Industries & Manufactur ing
Other s Energ y & Natural Resources Ban ks and Financial Services
Number of transactions
Size of transaction
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… 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
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…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
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… 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
…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
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Source : Kusuntu Research Jun. 2011
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… 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
…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
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SOUTH AFRICA
SWAZILAND
LESOTHO
SIERA LEONE
Source : Kusuntu Research Jan. 2011
- Advanced PE VC center
- Emerging PE VC center
…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
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Tax transparency - +
Inve
stm
en
t D
om
icile
co
nstr
ain
t
Weighted by number of funds registered
Source : Kusuntu-le-Club Research Nov. 2010
-
+ South Africa
Botswana
WAEMU Countries
Mauritius
Luxembourg
Dubai
a real growing interest worldwide
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A fast growing meetings
and conferences events
on the themes of Direct
Foreign Investment or
Private Equity investing
on Africa.
…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
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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
An ocean of opportunities for the investors
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Master Funds
Feeder Funds
Feeder Funds Feeder 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
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.
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Contact us
• A LinkedIn Group : kusuntu-le-club
• A Social Network : kusuntu.ning.com
• A Directory of African Private Equity: kusuntu-partners.com
• email : [email protected]
“Imagination is more important than knowledge"
Albert Einstein
A foreword…