Statistics released by Emerging Markets Private Equity Association (EMPEA), show a rebound of private equity (PE) activity in the emerging markets in 2010 from a sluggish 2009.
Africa, EMPEA notes, is getting significant interest from PE and venture capital funds, which presents a good opportunity for the continent's entrepreneurs and businesses to tap into these sources of capital.
Total funds raised for investment grew by 4% to US$23.5-billion from US$22.6-billion — a low not experienced since 2005. The 2009 dip was manifested by investor apathy following the global economic meltdown between 2008 and 2009. This recovery marked a return on investor confidence in the PE asset class.
Sub-Saharan Africa’s share, stood at US$ 1.5-billion or 6% of the total funds raised. With the exception of Latin America and the Caribbean, which recorded a 149% growth in funds raised in 2010 amounting to US$5.6-billion, Africa was second with a 36% year-on-year growth.
On the flipside, investments made in SSA in 2010 stood at US$613-million, which represented 41% of the committed capital, while Latin America’s and Caribbean total investment of US$6.6-billion was 118% of committed funds.
Encouragingly, Africa’s participation in this asset class is slowly but surely growing, prompting the view that prosperity for sub-Saharan Africa will come from business and not aid.
The region has seen an influx of PE companies seeking investment opportunities and many deals have been closed.
Private equity investors cite macro-economic growth potential, good economic fundamentals and increased GDP growth as some of the factors that will support the growth of the industry in sub-Saharan Africa.
Source: Business Daily