Africa enjoying private equity funds boom -OECD

By Peter Apps

LONDON, May 13 (Reuters) - Private equity funds in Africa are soaring, the Organisation for Economic Co-Operation and Development (OECD) said on Tuesday, describing the development as the "African investment story to watch".

As part of its 2008 African Economic Outlook, the OECD said funds raised for private equity in sub-Saharan Africa almost trebled in 2006 -- the last year for which it gave complete figures -- to $2.3 billion.

That even massively outstripped growth in funds focusing on the oil-rich markets of North Africa and the Middle East, which grew 50 percent over the same period.

But it warned a global downturn could hit inflows.

"Private equity is not a new phenomenon in Africa but it is drawing increasing attention as a viable and innovative vehicle for private-sector development on the continent," the OECD said in a research note.

"Improvements in the African investment environment and a series of spectacular African business successes ... have fuelled an unprecedented boom in the size and breadth of African private equity funds."

The OECD picked out the $2.4 billion buyout of Africa's third-largest mobile operator Celtel as a particular example of African private equity success.

Overall, a huge rise in mergers and acquisitions, especially in banking and telecoms, took foreign direct investment flows to $36 billion in 2006, double 2004 levels, it said.