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Investors to turn to African private equity
02 April 2014
Largest increase comes from pension funds and fund-of-funds
As the African private equity landscape evolves and expands,
investors’ continent-wide search for returns
becomes ever more complex.
An inaugural study entitled The search for returns
conducted by the African Private Equity and Venture Capital
Association (AVCA), RisCura and the South African Private
Equity and Venture Capital Association (SAVCA), charts investor
attitudes to African private equity.
In an industry that has been pioneered by development finance
institutions, there is now a plethora of global limited partner
(LP) investors in African private equity, ranging from family
offices, endowments, foundations and fund-of-funds to
multi-asset managers, pension funds and insurance companies.
The search for returns demonstrates that – despite the
occasionally disparate nature of their investment goals
– global institutional investors are extremely
optimistic towards African private equity, with 85% of surveyed
LPs indicating that they plan to increase their exposure over
the next 24 months.
The research indicates that funds of private equity funds
anticipate the largest increase in African private equity
allocation (5%), compared to an expected 2% increase in
allocation from pension funds, which currently have the lowest
exposure to African private equity, resulting chiefly from
changes to pension fund regulations and strategic asset
Changes to the interest and investment intentions of African
pension funds could represent a new source of capital for
private equity funds in Africa.
Michelle Kathryn Essome, AVCA chief executive said: "With this
survey, we are confirming a significant uptick in appetite for
African private equity among global LPs, particularly among the
newer investors in Africa: fund-of-funds and pension funds,
largely based in the US. We are also seeing an increase in the
appetite of African LPs for opportunities across the continent.
These trends really place a spotlight on Africa and highlight
its increasing relevance as a global investment destination."