Private Equity Funds in Africa Measuring up to Global Emerging Markets

Private Equity Funds in Africa Measuring up to Global Emerging Markets

From The Africa Report

Research that benchmarks African private equity against the global market for the first time shows the industry is far maturer than analysts had previously thought.

For a long time investors saw the African market as the toddler of global private equity – it would grow up into something promising, but not for a decade or so.

Now a refreshing burst of new research pointing to a good rate of return on investment in African private equity suggests that it has been a precocious adolescent all long.

Two reports released in partnership with the African Venture Capital Association (AVCA) were published in early April at the association’s annual conference in Cape Town.

In the first ever index to benchmark African private equity against the rest of the world, AVCA and US consultancy Cambridge Associates found African funds returned 11.2 percent for the 10 years up to the end of September 2012.

This put African private equity just be- low the emerging market average of 11.8 percent.

Way Ahead

However, Cambridge found that Africa outperformed other markets in the aftermath of the 2008 financial crisis.

“If you go to 2010, Africa was way ahead of the emerging markets, just nobody knew it at the time,” explains Eric Johnson, managing director at Cambridge Associates.

Returns for the 10 years to the end of 2010 were 13.9 percent for Africa, compared with 10.7 percent for emerging markets. In 2008, the difference was even starker – 10.2 percent for Africa compared with 3.1 percent for emerging markets.

“Those earlier fund vintages were actually quite competitive and ahead of a lot of the other emerging markets,” says Johnson.

Read more at theafricareport.com