JOHANNESBURG Feb 5 Sub-Saharan Africa attracted
$1.6 billion of private equity investment in 2013, the most in
five years, with the East Africa region experiencing the biggest
increase in deal activity, a survey showed on Wednesday.
However, private equity funds focused on sub-Saharan Africa
raised less money year-on-year, with 11 funds taking in $922
million, down 46 percent from 2012, according to data from the
Emerging Markets Private Equity Association.
As one of the world's fastest growing regions, sub-Saharan
Africa has caught the attention of private equity investors who
have been encouraged by rising consumer spending and natural
resource discoveries in countries like Kenya, Uganda and
Given the limited number of listed companies and low
liquidity in stock markets outside Johannesburg, Lagos and
Nairobi, the asset class also offers investors greater exposure
to fast-growing sectors.
Deals announced so far this year include an investment in
J&J Africa, a Mozambique-based transport firm, by Carlyle Group
and the asset management arm of South Africa's Investec
. Standard Chartered also said in January its
private equity arm had taken a 13 percent stake in
Botswana-listed supermarket chain Choppies Enterprises
. The size of both deals was not disclosed.
The amount of capital invested by private equity funds in
sub-Saharan Africa in 2013 represented a 43 percent increase
from the previous year, EMPEA said. This contrasts with emerging
markets as a whole, which saw a 7 percent year-on-year decline
in capital flow to $24 billion.
The sectors in sub-Saharan Africa which lured the most
capital were energy and natural resources, with $833 million
invested, and banking and financial services, which drew $256
East Africa accounted for just over a third of the 74 deals
completed in 2013. The amount deployed to the region doubled to
$769 million, nearly half of the total capital invested in
The region has become an investment hotspot after gas
discoveries in Tanzania and Mozambique and other hydrocarbon
finds in Uganda and Kenya.
One of the largest deals was a $600 million investment led
by Warburg Pincus in Delonex Energy, a central and east
Africa-focused oil and gas exploration company that was launched
Although fundraising declined in 2013, large sums had been
raised in the past few years and were now being deployed, EMPEA
"In Sub-Saharan Africa, 2013 was the beginning of a big
deployment phase for private equity capital, resulting in a drop
in fundraising for the region but a five-year high for
investment, said Robert van Zwieten, EMPEA's chief executive.
"A large amount of capital was raised for the region in
previous years, and now that capital is being put to work."
He added that the prospects for 2014 were promising as six
funds currently in the market with targets above $500 million
have a pan-Sub-Saharan African mandate.
"We anticipate 2014 to be an active year for fundraising in
the region," he said.