Worldwide: Private Equity In Africa: Report From AVCA Conference 2015

Going Together, Making Money, Doing Good And Growing In Africa
Last Updated: 9 July 2015
Article by Raj Kulasingam and Nicholas Plant

On the Eurostar to Paris

I am on the 0935 high-speed Eurostar train from London to Paris to support the Dentons Paris office for its Invest in Africa event at the Medef Centre on 22 May. As I fire up the laptop to finish off this month's article, I wonder whether I will ever sit on a high-speed train in Africa....

Private equity as a force for good in Africa

As my past writings may have alluded to, private equity is a space that I am passionate about. I love the idea that you can use money, expertise and relationships to grow businesses - surely capitalism at its most raw. However PE has had its share of detractors.

For example, in the US, critics say that PE makes money the wrong way - buying "target companies", making people redundant, piling on debt and selling the remnants in tidied up boxes - which by then are doomed to fail. To make matters worse, PE firms get tax breaks, paying 15 percent on profits instead of 35 percent.

But the industry and its defenders say it is a strong creator of jobs and value, and a vital source of ambitious and diversified returns for pension funds, university endowments and other investment pools that serve ordinary people.

Africa is at a different stage of growth to the developed world and growth capital is what Africa needs and PE provides. Africa needs all forms of capital so PE capital in Africa has been welcome and has not had much of the criticism (at least so far!!) that PE has had in the developed world.

A plug for AVCA

So PE in Africa is different to PE in the developed world. And this difference is epitomized by AVCA (African Private Equity and Venture Capital Association) - the pan-African industry body that promotes and enables private investment in Africa. I got involved in AVCA when Dentons became a member a few years ago. Its mission statement is that:

"AVCA plays an important role as a champion and effective change agent for the industry, educating, equipping and connecting members and stakeholders with independent industry research, best practice training programmes and exceptional networking opportunities."

I have been involved with many trade organizations and business clubs, and I think that the key to success for a club is creating the right inclusive environment and making members feel that they are part of a family. AVCA seems to have found the formula for this.

Africa PE is young and fun

The Africa PE industry is still young and this youthfulness comes through in its members and their attitudes. The attitude that I like the most is that, whilst there is obviously competition between PE houses, advisers, funders and other professionals, there is still a sense of camaraderie and cooperation with all involved. I think Runa Alam (DPI) hit the nail on the head when she opened theA VCA conference by quoting the African proverb:

"If you want to go quickly go alone; if you want to go far, go together"

This diverse membership is united by a common purpose: to contribute to Africa and be part of the Africa growth story. That's what excites me about working on the continent compared to other regions. And perhaps overlaying all of this is that the Africa PE industry knows how to have fun.

I met Robbie Brozin (the founder of Nandos from South Africa) recently and heard him talk about how he grew Nandos from one small restaurant to the global chicken piri-piri giant of today. An inspiring story. He had some great one-liners about doing business and the one that stuck was:

"My vision was always to have fun and make money and if you are not happy in your job you should something else!!!"

AVCA in 2014 into 2015

After AVCA 2014, Nicholas Plant (Head of PE at Dentons) and I produced an article on the key points from that conference. Click here to read the article.

An excerpt of this with an update from 2015 is set out below:

  AVCA 2014 AVCA 2015
1. Huge enthusiasm and an industry that is focused on taking a company from one stage in its development to the next, rather than financial engineering. No change.
2. Private equity is a bifurcated market in Africa. On the one hand the large ticket deals in energy, telco and financial services transactions with deal values in excess of US$100 million. All other businesses typically have deal values of between US$1 million and US$30 million. There is very little in the middle. No change. A theme in 2015 is the need for more venture capital funding to grow these smaller companies into the PE deal size companies of tomorrow.
3. Five key issues that PE investors must take into account when investing in Africa:
  • Availability and desirability of double tax treaty relief
  • Availability of bilateral investment treaties
  • Existence of exchange controls
  • Local content ownership requirements (especially in the oil and gas sectors)
  • speed of incorporation of the corporate structure
Larger transactions use acquisition structures that variously include Dutch or Mauritius entities and sometimes also Luxembourg and Cayman entities.
Structure and diligence are key to doing deals anywhere and there is no difference and no change for Africa.

However, the overarching issue for PE investors is quality of the management team and alignment with the entrepreneurs.

AVCA 2015 - not a conference but an industry gathering

There were so many key points at AVCA that it has been difficult to choose which ones to highlight. In addition, I had meetings midway through the conference so I missed some of it including (by all accounts) a great presentation by Miles Morland of Blakeney Capital. Reports of his more memorable quotes can be found on Twitter including the following controversial one:

"I would rather trust a Nigerian on a handshake than an American on a signed contract. "

My notes and key takeaways from AVCA 2015 are set out below:

Issue Headline from AVCA Notes Key take away
General outlook Investing in Africa has got easier. In the 90s you were often negotiating with counterparties that did not understand where investors were coming from and heading to.

"You were often negotiating with yourself" – Jurie Swart, AIIM.
Competition for deals has increased so investing is harder from that perspective.

However the flip side is that the competitive processes have got better.
Relationships and patience are key.
Money There is US$3.8 trillion of PE in the world but only about 1 percent of this goes to Africa.

"More money is being raised for PE in Africa more than $22 billion raised since 2007" but we have a long way to go to make a dent in global PE terms.
More sovereign wealth funds and local and international pension funds (e.g. New York State Common Retirement Fund and City of Baltimore Retirement Fund – both attended AVCA) are investing on the continent. There is no shortage of money. Lots of people are looking for yield (Mark Mobius). However this is for mid-large cap deals and there is still a dearth of capital for smaller deals (the VC end) and for underserved sectors (e.g. agriculture which employs 70 percent of Africans) and geographies.

Co-investing is still popular but many LPs don't take up co-investing rights for a variety of reasons including capacity issues.
GPs/Fund Managers Numbers of GPs/Fund Managers investing in Africa are increasing every year. This has resulted in greater expertise and knowledge about PE. Africa is a big market so there is no issue on overcrowding yet.
PE opportunities The number of PE opportunities is increasing in many regions of Africa.

You just need to look harder and know how to find them.
Outside South Africa, East and West Africa dominate the PE landscape. PE opportunities are there but to find them you need to be on the ground, show up, be open, and look to partner with others.
Sectors GPs are investing across a variety of sectors. Africa needs investments in all sectors. Stakeholders need to work together to make each of the sectors structurally attractive for investors (including PE).
Exits Exit routes are broadening and there continues to be an influx of trade buyers plus increasingly seeing secondary exits (PE to PE), though LPs are not keen on PE to PE exits. Exits (cash to cash) in Africa take longer than exits in developed markets.

There is no difficulty for an investor to exit a well-run company.

There is a perception amongst LPs that GPs chasing secondary market deals are just lazy.
Finance and credit funds There is still a massive opportunity for financial services investments in Africa.

Opportunities are not in first tier banks but in the second and third tier banks.
Technology will play a big part in the growth of the financial services industry in Africa, pushed by the capital requirements of Basel 3 and the retreat of the availability of traditional sources of debt.

We will see an increase in private debt/credit funds as they move in to fill a gap in the market.

Africa PE funds are looking to leverage at fund level (in addition to asset level) to boost returns.
Risks Risks can't be considered in the abstract. You may choose to accept certain risks if returns are high enough (i.e. revenue growth or earnings growth or both). E.g. the GDP of a city or region may be markedly different to the GDP of country.

Currency movements can kill returns if you don't keep an eye on them
You can't generalize about risks and need to do proper and intelligent due diligence.

Due diligence and market awareness is an ongoing process and you should have regular reviews of your investments and the applicable market (e.g. Abraaj reviews its companies annually at a minimum and semi-annually at fund level).

So where to for PE in Africa?

Of course, PE in Africa is not all a bed of roses. There will always be the good, the bad and the ugly in all parts of the world. It's being able to see beyond the hype and the myths that is key.

Ultimately what is driving growth and PE in Africa is that what Africa wants is what the world wants. Africans have the same aspirations as anyone else. What is needed is the investment to match these aspirations, which is where the opportunity is.

The good news from AVCA is that the overall outlook for PE in Africa is positive but the question is whether this can be sustained to match the ambitions of Africans. Finishing on a positive note .....

"We always believe in Africa, [that] our investments can make money there" - Johnny el Hachem, CEO, Edmond de Rothschild

Growth needs investment, which needs stability, leadership and the right economic and regulatory framework and policies. That's the challenge for Africa.

This article was first published in the February 2015 edition of Financial Nigeria magazine, a monthly development and finance journal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
28 Sep 2017, Seminar, London, UK

On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

4 Oct 2017, Conference, Munich, Germany

Dentons Global Real Estate Group is delighted to be exhibiting once again at EXPO REAL, the International Trade Fair for Property and Investment which takes place on 4-6 October, 2017 in Munich, Germany.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.