top story Global PE Firms’ Investments in Africa More Than Doubled in First Half

It turns out Kohlberg Kravis Roberts & Co. isn’t the only one to stop and smell the roses. The buyout shop, which earlier this year invested in Ethiopian flower company Afriflora, is one of a number of global players drawn to the growth prospects of Africa. Investment by international shops more than doubled in the first half of the year to $1.5 billion compared with $621 million during the same period a year earlier, data from law firm Freshfields Bruckhaus Deringer show. As KKR’s deal in Ethiopia indicates, interest is expanding beyond South Africa, which has historically commanded the bulk of global firms’ foreign investment. According to Freshfields, between 2004 and 2009, 75% of capital invested by global firms was in South Africa. Between 2009 and 1H 2013, that figure was 10%. Although the percentage of capital it is attracting has diminished, South Africa will likely remain a destination of choice for global investors. Citing data from CDC Group PLC, Emerging Markets Private Equity Association Director Mike Casey noted at the African Development Forum that there are roughly 3,100 companies on the continent that generate revenue of at least $50 million. Of that pool roughly 42% are in South Africa. "South Africa has still got great demographics and sophisticated credit markets," said Rob Cant, a senior associate in Freshfields’ Dubai office. "But now there are other jurisdictions for firms to invest." Indeed, growth in Sub-Saharan Africa has moved at a swift clip-Nigeria’s gross domestic product sailed past South Africa’s earlier this year-and global firms are interested in finding ways to capitalize on those gains. Driving that growth is a young, and increasingly urban, population, and expanding wealth, said Mitchell Presser, head of Freshfields’ U.S. mergers and acquisitions practice.


Pravin Gordhan
Minister of Finance, South Africa, at the Ai CEO Investment Climate Summit 2012
Dr Nkosazana Dlamini Zuma
Chairperson, AUC, at the Ai CEO Infrastructure Investment Summit 2013
Ed Mathias
Director, Carlyle Group, at the Ai CEO Infrastructure Investment Summit 2013
John Oliphant
Principal Executive Officer, Government Employees Pension Fund