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Africa nabs $1.6B in private equity investments in 2013

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February 6
8:26 AM 2014

Sub-Saharan Africa drew private equity investments worth a total of $1.6 billion in 2013, the biggest in five years, according to a survey by Emerging Markets Private Equity Association. The largest increase in deal activity was seen in the East Africa region, it said. 

Reuters, citing the EMPEA survey, however said that private equity firms which concentrated investments in sub-Saharan Africa generated less cash year-over-year. 11 funds took in $922 million last year, a decline of 46% from 2012.

Private equity investors were enticed by surging consumer spending in the region as well as natural resource discoveries in countries such as Kenya, Uganda and Mozmbique. Sub-Saharan Africa is now one of the world's best performing regions, the report said.

Stock markets in Africa, except for Johannesburg, Lagos and Nairobi, currently have a small number of listed companies as well as low liquidity. This gives private equity investors greater exposure to fast-growing sectors, Reuters said.

Some of the notable private equity deals this year include an investment by Washington, DC-based Carlyle Group LP and the asset management unit of South Africa's Investec in J&J Transport Africa, a cargo company in Mozambique. Standard Chartered in January also announced that its private equity arm has picked up a 13% stake in Botswana-listed grocery chain Choppies Enterprise Ltd. Financial terms of both deals were not made public, the report said.

EMPEA said that the amount of capital poured by private equity firms in sub-Saharan Africa last year jumped 43% from that of 2012. This runs counter to emerging markets in general, which experienced a 7% year-over-year decrease in capital flow to $24 billion, Reuters said.

The sectors in sub-Saharan Africa which received most investments were energy and natural resources and banking and financial services. The energy and natural resources sector attracted $833 million in investments, whereas $256 million was committed to the banking and financial services industry, the report said. 

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