Global private equity giants are retreating from African investment

Steve Schwarzman, CEO and co-founder of a Blackstone Group, participates in a Business Roundtable discussion

Steve Schwarzman, CEO and co-founder of a Blackstone Group. Photo: Mark Wilson around Getty Images

Background: In 2014, Blackstone acquired control of Black Rhino to deposit billions into appetite and infrastructure projects in Nigeria and Ethiopia, though it unsuccessful to tighten a vast deals Blackstone was looking to finance. Blackstone’s depart comes after years of large American PE players withdrawal a market.

Between a lines: The mismatch between a distance of accessible deals in African markets and a aim investment distance of tellurian item managers such as Blackstone continues to be an issue.

  • In 2017, roughly 90% of Africa-focused PE account sizes were over $100 million, nonetheless usually about 15% of African private companies reported income over that number.
  • Moreover, a standard PE timeframe of a five-year holding duration is mostly too brief in African markets, where companies need some-more indiscriminate change, banking risk is a challenge, and exit opportunities are limited.

What to watch: As tellurian PE giants leave a region, Africa-focused firms continue to grow. DPI, for example, is in a routine of lifting a third fund with an $800 million target. DPI and competitors like ECP, Helios, Actis, and Ethos tend to concentration on smaller deals, mostly between $70 million and $100 million.

The bottom line: Funds that successfully daub opportunities in some of a world’s fastest-growing markets tend to share a traits of Africa specialization, studious capital, and toleration and ability for smaller assets. The large U.S. players seem unfeeling in bettering to these realities in a nearby term.

Aubrey Hruby is a comparison associate in a Atlantic Council’s Africa Center.

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