Tag Archives | private equity
Automotive Manufacturing Plants prepare to expand in Africa While the South African automotive market looks […]
During the economic downturn, companies competed for market share and volume, which meant frequent price […]
Inflation – According to the Ghana Statistical Service (GSS), inflation remained stable in December, effectively […]
By Elvis Ongeti Different countries have different currencies. There exists a need to purchase goods […]
Global Chairman, John Veihmeyer, speaks to CNN’s Marketplace Africa about the firm’s expanding presence in […]
The recent lack of growth in the developed markets coupled with perceived improvements in political […]
Very few Africans make use of formal financial services. In fact, only 24% of adult Sub-Saharan Africans had a bank account in 2012, while the global average was 50%, says the Global Findex Database. In the following countries less than 10% had an account that year: Sudan, Senegal, DRC, Central African Republic, Chad, Niger, Madagascar and Mali.
The adoption of mobile money is driven by multiple factors ranging from banking regulations, establishment of a new sales channel in comparison to traditional distribution channel and readiness of consumers to use handheld devices beyond traditional voice and SMS services. After a slow start in the rest of Africa, mobile money seems to be finally picking up beyond East Africa.
Deal sourcing in Africa is driven largely by deep understanding of local markets, strong local relationships and networks. If used well, it will not only ensure exclusivity during the acquisition process but can guarantee reasonable entry valuation and lay solid foundation for a smooth relationship with the portfolio companies throughout the investment life cycle. Deals that are done through auctions tend to be competitively priced and in the process, create unnecessary distraction for management.
The attraction of PE to Africa is driven largely by many factors such as: the huge market size – Africa is home to over 1 billion people; relatively young population – about 60% are below 40 years of age; favorable demographics – rising middle class, increasing urbanization, increasing disposable income etc; improved democratic rule and governance, increasing public sector reforms, reducing incidences of civil unrests and wars etc and the mobile technology revolution in Africa driving increased efficiencies, productivity and reducing cost of doing business.
As much as 73% of African finance executives believe that the role of finance will increase five years from now, according to the findings of our KPMG Africa CFO Survey 2014. This is compared with the 56% obtained in our Global CFO Survey 2013. Moreover senior finance executives all over want to increase their “Decision Support” capabilities and decrease efforts on “Transaction Processing” in the next two years.
Inclusive economic growth is growth that leads to job-creation, causing a ripple effect on the purchasing power of the majority of the populace. The private sector, and in particular SMEs, are the drivers of an economy. SMEs are also the largest providers of direct employment and inclusive growth can be achieved through promotion of policies that would drive their development. According to the Central Bank of Nigeria, 96% of Nigerian businesses are SMEs (uS = 53%, Eu = 65%). Inclusive growth can be achieved by positioning these SMEs to take advantage of the opportunities in the economy.
At the credit application and processing stage, banks need to invest in systems that allow more efficient and tailored risk profiling. Such a system rewards diligent entrepreneurs with lower lending rates and greater access to capital. Post-disbursement, the establishment of dedicated advisory/support teams can help minimise credit risk and improve credit management by educating and advising SMEs on day-to-day financial management, record-keeping and corporate governance. The incremental cost of this will be easily offset by the increased patronage and lower default rates.
Recently the Carlyle Group, one of the largest global asset management firms, specialising in private equity, closed its maiden sub-Saharan Africa Fund at around US$700m – about 40% beyond its original target. This has followed the closure of a number of similar Africa funds at anywhere from US$350m to US$1bn. Private equity operating norms suggest that these funds will have to be deployed within the next couple of years – and this illustrates the direction of travel of one of the most focused streams of global investment capital.
At the credit application and processing stage, banks need to invest in systems that allow more efficient and tailored risk profiling. Such a system rewards diligent entrepreneurs with lower lending rates and greater access to capital. Post-disbursement, the establishment of dedicated advisory/support teams can help minimise credit risk and improve credit management by educating and advising SMEs on day-to-day financial management, record keeping and corporate governance. The incremental cost of this will be easily offset by the increased patronage and lower default rates.
Inclusive economic growth is growth that leads to job creation, causing a ripple effect on the purchasing power of the majority of the populace. The private sector, and in particular small and medium enterprises (SMEs), are the drivers of an economy. SMEs are also the largest providers of direct employment and inclusive growth can be achieved through promotion of policies that would drive their development.
South Africa was the most active market for PE investment on the continent in H1 2012 with South African targets attracting $547m over the period.
Among the most important private equity players are public companies, which often base their investment decisions on considerations other than pure profit
Private equity investment into Africa, and fund managers’ ability to raise capital for funds dedicated to the continent, are both trending strongly upward.
Africa’s enormous growth potential is now an open secret with the International Monetary Fund (IMF) predicting that by 2015 seven out of the top 10 fastest growing economies will be in the region.
The 2014 KPMG and SAVCA (Southern African Venture Capital and Private Equity Association) Venture Capital and Private Equity Industry Performance Survey indicates increasing investor appetite for private equity
As recently as two years ago, a typical conversation with a multi-national company looking for investment in Africa would be peppered with questions around corruption, political stability and sustainability – all reflecting a weight of negative stereotypes that we seemed unable to shake off.
Private equity is a vital facet of sustainable development – serving as a mechanism to allow businesses to establish themselves, and to expand. Private equity funds enhance that effect through collective investment, in areas related to private equity: venture or growth capital, distressed investments, leverage buyouts, or mezzanine capital.