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Private equity

Resilience makes Africa attractive to investors, fund managers



’Tokunboh Ishmael, CEO of Alitheia Capital and chair of the African Private Equity and Venture Capital Association, is seen speaking at the Association of the Luxembourg Fund Industry’s Private Equity and Real Estate Conference, 30 November 2021. Image: Screenshot of ALFI webcast

’Tokunboh Ishmael, CEO of Alitheia Capital and chair of the African Private Equity and Venture Capital Association, is seen speaking at the Association of the Luxembourg Fund Industry’s Private Equity and Real Estate Conference, 30 November 2021. Image: Screenshot of ALFI webcast

Africa is not only a place to “do good” as an investor, it’s a place where “you’ll do well”, due to its fast growing population and the resilience of essential sectors, ’Tokunboh Ishmael argued at this week’s alternative funds conference in Luxembourg. “It really does offer numerable opportunities.”

Businesses “fueling accessibility of essential services” in Africa “have shown themselves to be resilient and attractive” as investment opportunities, attendees of a major investment sector conference heard.

“Even in midst of [the] pandemic we’ve seen the resilience of certain sectors” in Africa, namely financial services, healthcare, infrastructure and non-discretionary consumer goods, according to Ishmael. She is founder and CEO of Alitheia, a private equity investment firm in Lagos, Nigeria, and chair of the African Private Equity and Venture Capital Association. Ishmael was speaking during the “PE investing in Africa” session at the Association of the Luxembourg Fund Industry’s Private Equity and Real Estate Conference on Tuesday.

Ishmael addressed the online conference from Lagos to pitch European and international investors on the African continent.

Citing figures from the African Private Equity and Venture Capital Association, she said that Africa has “the largest free trade area in the world”, an “expanding middle class” and 13 of the world’s 20 fastest growing cities this century. Collectively the continent needs some $170bn in infrastructure investment annually, with a financing gap of roughly half that amount. At the same time, “business and consumer spending is expected to surpass $6.7trn by 2030”.

On track for record year

The financial, consumer and technology sectors have represented the largest share of private equity deals the last five years, the association’s figures showed. “The growth we’ve seen in the past half-decade has been phenomenal,” with much of that uptick “coming from local GPs”, Ishmael commented. Indeed, both the number of fund managers based in Africa and the total size of Africa-based PE funds were up notably. PE investments are growing at nearly 10% year-on-year, despite the pandemic, and the trade group expects 2021 to be a record year. (“We are seeing significant activity in the VC space” as well.)

Ishmael’s message was that “the opportunity to invest in the continent is there; the fund managers you can partner with are there.”

Asked about the risk profile of investments in Africa, Ishmael noted that all investments carry risk. She observed that the global pandemic illustrated how no region is immune from risk. In her view, the African fund managers’ emphasis on non-discretionary consumer goods and other essential sectors reduces the risk of many investments.