Wednesday, 6 August 2014, Washington, DC, USA
The African Private Equity and Venture Capital Association (AVCA), together with the Atlantic Council Africa Center, brought together African private equity industry veterans to discuss ‘The evolution of private equity in Africa’ during the recent US-Africa Summit in Washington, DC.
The US-Africa Summit was a three-day hive of activity hosting 50 African heads of state and governments, and other business leaders from the US and Africa. In addition to the official Summit, there was an estimated 300 side events, all focused on strengthening business ties between the US and Africa.
The AVCA and Atlantic Council Africa Center expert panel included Walé Adeosun of Kuramo Capital, Runa Alam of Development Partners International, Sarah Alexander of The Abraaj Group, ‘Tokunboh Ishmael of Alitheia Capital, Papa Madiaw Ndiaye of AFIG Funds, and Bobby J. Pittman of Kupanda Capital.
The discussions provided a seasoned view of how private equity has evolved in Africa and what it takes to succeed – a fitting backdrop to some of the major private sector investment initiatives that were announced during the Summit. AVCA’s Michelle Kathryn Essomé welcomed the panel, and Aubrey Hruby, visiting Fellow of the Atlantic Council Africa Center, moderated the discussion.
On the perception of risk in Africa, Aubrey Hruby commented, ‘Companies already invested in Africa have a more realistic view of risk than those not there yet’, a view also supported by the results of AVCA’s recent global LP Survey, The search for returns: Investor views on private equity in Africa.
Runa Alam, on the maturing of the private equity industry in Africa, ‘African private equity is “walking on two feet” as an industry, and is not in its infancy.’
Walé Adeosun supported this view: ‘Private equity in Africa is very institutionalised, and the industry has evolved very quickly’.
Papa Madiaw Ndiaye highlighted that much of private equity in Africa is growth capital, ‘Value add in private equity in Africa is to focus on revenue growth, and cost cutting comes later.’
On the opportunities, ‘Tokunboh Ishmael cited the infrastructure and logistics deficits across Africa as one of the main stumbling blocks in trying to get products to consumers, and Walé Adeosun stated that these logistical challenges in Africa were viewed as opportunities by entrepreneurs.
The 2014 edition of AVCA and EY’s annual Africa Private Equity Exits Study, Broadening Horizons, how do private equity investors create value?, reinforces these views of an increasingly maturing industry. The 2014 edition finds the industry in Africa is characterised by growth capital investment, local networks and knowledge are critical to success, strategic trade buyers are important for exit planning, and secondary private equity activity is increasing.
In addition, AVCA member The Carlyle Group announced a strategic investment partnership with Dangote Industries Limited, a diversified business conglomerate based in Africa, during the Summit. The partnership will invest substantial equity across the oil and gas value chain, and in the consumer, financial services and agribusiness sectors via the Carlyle Sub-Saharan Africa Fund, where Dangote Industries Limited is an anchor investor.
Thank you to ‘The evolution of private equity in Africa’ panellists:
Walé Adeosun, Founding Partner and Chief Investment Officer, Kuramo Capital
Runa Alam, Chair of AVCA, and co-Founder and Chief Executive Officer, Development Partners International
Sarah Alexander, Managing Director, The Abraaj Group
‘Tokunboh Ishmael, Director of AVCA, and co-Founder and Managing Director, Alitheia Capital
Papa Madiaw Ndiaye, Director of AVCA, and Founder and Chief Executive Officer, AFIG Funds
Bobby J. Pittman, Managing Director, Kupanda Capital
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