EA a major market for private equity

Kenya is among African markets considered a favoured destination for private equity investments in 2013 while Tanzania and Rwanda will be favourites in East Africa, according to a forecast by White Lake Group, a global private equity consulting company.
“The larger, more established markets of South Africa, Nigeria, Kenya may be seen as the top emerging markets, while equally fast-moving but less defined Angola and Ethiopia may be seen as frontier markets,” noted White Lake in its 2012 last quarter forecast.
“Though Kenya does not benefit from the resources of many other African countries, its relatively well-educated workforce and position as a strategic trading hub in East Africa has made its economy relatively dynamic,” said White Lake Group.
It noted that other factors making the country attractive to PE deal seekers include efforts being made to make the capital Nairobi a regional technology hub with opportunities offered by a mass market with high purchasing power.
For example, the Kenya-based InReturn Capital said it will be announcing a merger with a foreign-based fund this month while Catalyst Capital Partners is also expected to announce new investments in the country in the first quarter of this year.
Africa Finance Corporation has line up a $200 million investment in the country this year.
Tanzania’s fast growing economy will be a big attraction for PE investments and forecast by development finance groups like the Africa Development Bank shows that Tanzania’s economy will be one of the fastest growing in Africa in the next five years.
The country is expected to have opportunities in mining, banking, tourism, and oil and gas.
White Lake also identifies Rwanda as a favourite destination for deal hunters, an indication that things are looking up for East Africa.
“Rwanda may be considered a frontier market by many investors, but it’s post-genocide economic recovery has been remarkable. Many investors rank Rwanda highly when it comes to ease of doing business in Africa,” notes the report.
The forecast’s increased activity for PE funds in the region is in line with the progress made in the past two years when more than 10 private equity funds were formed in the region.
These are: Batian Fund, Fusion African Access, Rift Valley SME Fund 1, and Catalyst Principal Partners.
The While Lake Group report however identifies lack of adequate infrastructure as one of the biggest hurdles facing attractiveness of Africa to PE funds despite the continent’s potentially huge market for goods and services.

“Lack of infrastructure like roads, rail, electricity and adequate water supply represents a major challenge for the distribution, storage and transport of goods to the consumer. With the lack of roads in Africa, coastal countries such as Ghana, Kenya and Madagascar currently have an advantage in importing and exporting,” notes the report. 

Source : abdas.org

Posted on : 30 Nov,-0001

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