Economic development efforts in Africa have traditionally been the purview of foreign aid agencies, local and international NGOs and publicly-funded multilateral finance institutions. African governmental spending has also played a central role. Private-sector funded economic development, while existent, has been much less present and visible.
This situation, however, has been steadily changing over the past 15 years, and the growing Africa-focused private equity (PE) community has a unique opportunity to play its part in what is becoming a symbiotic development relationship. African economic growth has created opportunities for PE firms to create value and get returns, and, at the same time, PE is good for African economic development: it helps to create a robust and healthy business sector, which promotes job creation and political stability, and takes pressure off governments to be universal problem-solvers. At its core, African growth equity hires, while leveraged-buyout-style private equity in development markets fires. Read more
It seems to be getting harder and harder to find a news story about the Middle East and North Africa (MENA) that doesn’t fall within the narrow narrative of disorder and political violence. From state collapse in Libya and the tragic conflict in Syria to the geopolitical flashpoint in Yemen, the headlines from the broader region make for bleak reading indeed.
These challenges are real and they are significant, but there is another story about the region that remains under-reported. It is a story of dynamism and entrepreneurship, and it’s one of how private capital is playing a critical role in creating new realities for the region and its people. Read more
Kenya’s conservative but fast-growing $7.8bn pension fund industry has just taken a pioneering step. For the first time since the 1990s, a leading Kenyan pension fund is putting its cash into a private equity fund.
The pension fund for Kenya Power and Lighting Company, which has 6,000 workers and $300m under management, will invest $4m with Ascent Capital, a new regional private equity fund that makes its first close this week with $50m and will back companies in Ethiopia, Uganda and Kenya. Read more
By Rajeev Mantri, Navam Capital
Energy and clean technology investing has proven to be disastrous for venture capitalists. Capital allocated to clean tech fell to less than half in 2013 from the $3.7 billion invested in 2012, and new clean tech-focused funds were able to raise less than $1 billion last year, compared to $4.5 billion raised in 2012.
High-profile flameouts like Solyndra, A123 Systems, Konarka, Miasole, Better Place and Fisker Automotive have, appropriately enough, made investors very wary. Billions of dollars of equity has evaporated. Successes, such as Tesla Motors and Nest Labs, have been extremely rare. Read more
Ritu Kumar is the Vera Wang of Indian bridal wear, one of the oldest and most coveted designers for Indian women on their big day. She’s also a big name for formal women’s fashion and even western clothing in India. Her stores are fondly known as “Ritu’s”.
The Everstone Group, the India and South East Asia focused private equity investor that recently invested in Burger King here, has now put Rs1bn ($16.7m) into buying an equity stake in the brand, part of a wider trend in investor interest in India’s luxury fashion sector. Read more
At a time when everyone is nervous about emerging markets, Henry Kravis, a well-recognised pioneer in the private equity industry, is optimistic about India.
And given his New York-based company, KKR, made a return on equity of 27 per cent last year, it’s worth hearing why. Read more
On Friday evening in Davos, Paul Kagame, Nouriel Roubini and Carlos Ghosn discussed the next steps for emerging markets. Do you want to know what their predictions were?
EM private equity investors don’t. “We don’t get our EM news here from public debates,” says Paul Fletcher, from PE firm Actis, at Davos. His former colleague Sev Vettivetpillai agrees agrees: “You need to be on the ground yourself to understand what’s happening.”
However, they didn’t mind sharing their view on EMs. Read more
Africa’s private equity industry, with the exception of South Africa, is at a phase of relative infancy and has its share of shortcomings. But factors like political stability, infrastructure growth and rising consumerism have helped spike activity in the continent’s PE hotspots across west, east and southern parts of the continent, fuelling optimism for 2014. Read more
Like this but without the beef
The Whopper is coming to India – and it looks like it will be relatively inexpensive to break into the market.
“My sense is that to build a solid and profitable business as a Burger King franchise in India over the next seven to ten years will require somewhere between $80m to $100m of capital commitment,” says Sameer Sain, managing partner at Everstone Capital, a private equity firm which this month entered a joint venture with Burger King to bring the fast food brand to India. Read more
Addis Ababa: hello PE
When I heard about the US investor, Gabriel Schulze, who’d gone out on a limb and started up Ethiopia’s first private equity fund, I couldn’t wait to meet him.
The feeling wasn’t mutual. Famously reticent, it took me more than a year to convince him to meet me. But when we did, we ending up busting our two-hour time slot over tea and coffee at a private members’ club in London and speaking for six hours. You can now read the interview from that meeting, Portrait of a frontier investor, on FT.com. Read more
Malaysia is not a market littered with private equity deals. Nor is the wider region of southeast Asia. Dealmakers have struggled with relatively high asset prices in Indonesia, and governance and other concerns in Malaysia and Vietnam.
But on Wednesday KKR, the big US-based private equity firm, closed a deal to invest Rm642m ($200m) in Weststar Aviation Services, a company that operates helicopters for the offshore oil and gas business. Read more
Education in Brazil has been one of the hottest sectors for private equity wheeler dealers in recent years. Little surprise, then, that some are looking to cash out now.
The latest is GAEC Educação, which on Friday filed plans to raise as much as R$626m ($282m) through an initial public offering. Read more
Bidzina Ivanishvili, billionaire prime minister of Georgia (pictured), has launched a much-vaunted private equity fund less than a month before key presidential elections.
The $6bn Georgian Co-Investment Fund has attracted heavyweight investors including the UAE’s Abu Dhabi Group, Turkey’s Calik Holdings and China’s Milestone Intl Holding – plus a commitment of $1bn of his own money from Ivanishvili himself. The fund’s size and governance structures raise concerns in an environment where business and politics have often been intertwined. Read more
Mexico is having its day in the sun when it comes to private equity investment. After stock and bond investors it is now the turn of PE investors to flock to Latin America’s second largest economy.
Funds raised for private equity and venture capital investment in Mexico hit a record $879m during the first six months of this year, according to figures from the Latin American Private Equity & Venture Capital Association (Lavca). This compares to just $20m raised during the same period before. Read more
Citadel Capital has taken another step away from its private equity roots on Monday after it obtained regulatory permission to go ahead with a $528m share issue.
The group, which has $9.5bn under investment in Egypt and across Africa, is in the process of transforming its business model to that of an investment company, as the fallout from the turmoil of the Arab Spring continues to bite. Read more
Speak to people in Mumbai’s business community and it sounds like it’s about to go into pause mode, as investors wait for the general elections to bring some clarity before shelling out any cash.
PwC seems to think otherwise. In a new report, the consultancy says there are several business reasons for private equity funds to invest in India in the coming months. Read more
Despite South Africa having the most active financial markets in Africa, as well as an established track record in private equity, black empowerment companies have struggled to attract PE deals over the last few years.
In 2012 however, things were a bit different. The number of investments has picked up. But the average size of invesments has shrunk. What’s going on? Read more
A lot has been written about the potential of the African consumer but there’s not been exactly a flood of deals to demonstrate investor interest.
Well, here’s one: the Abraaj group, one of Africa’s larger private equity groups, has snapped up Fan Milk International of Ghana. It’s a vote of confidence for the west African country, which has seen consistently high growth over the last few years, and for the region in general. Read more
Southeast Asia’s credentials as the next great frontier for economic growth, spurred by young populations and cautious optimism over planned structural reforms is one this year’s big emerging market themes. Just look at the Philippines, which notched up 7.8 per cent growth in the first quarter, even beating China.
But for private equity, the region is proving a tough nut to crack. Last year, according to consultancy Bain & Co, was “underwhelming”. Deal value fell by 16 per cent to $4.9bn, the number of deals dropped to just 32, from 39 the year previously. Read more
There’s been no shortage of private equity interest in Latin America. Beyondbrics has written plenty about the trend (for example, here and here).
But what about those returns? How good of an investment has LatAm been for PE investors? It’s a tricky question given that both individual firms and industry associations are reluctant to give out returns data to the media. Read more