Private equity investment in Sub-Saharan Africa has been topping the charts for EMEA and global general partners this year. Looking at deal activity from January through April 2014, we can see that inbound investments by EMEA-based private equity firms grew more than 800% as compared to the same period in 2013, reaching a record-high volume of €748.7mn at the close of April. (See figure 1).
Similarly, global PE firms have also shown renewed interest in the region with invested capital growing by more than 260% in the same period to €807.6mn.
Much of the spike can be associated with two unusually large deals, which total €656.2mn. These were:
- IHS Nigeria , a mobile infrastructure company providing telecommunications services in Nigeria, Sudan, Ghana, and the United Arab Emirates, which was acquired for €398.2mn by a consortium of seven investors.
- Adcock Ingram Holdings, a healthcare company that manufactures, markets, and distributes healthcare products, including prescription medicines and over the counter consumer goods, primarily in South Africa and India, was acquired for €258mn by BB Investment Co. and Community Investment Holdings.
What these deals demonstrate is the opportunity associated with the evolution of Sub-Saharan Africa from an agrarian-based to consumer- and service-based economy, largely due to its rapidly expanding middle class. Backing up this trend, we have observed that most of the deals involved a ‘consumer focused’ target company.
In effect, both the Media (including cinema and entertainment) and Retail sectors amassed 72% of total deal counts in Sub-Saharan Africa.
The medium- to long-term investment horizon and an ability to cope with some of the volatility expected in the region’s growth trajectory, positions the private equity segment very favourably to capitalise on the expected growth within the region.
This analysis is included in the EMEA Private Equity Market Snapshot report for Q2 2014. Read the full report here.