An appetite for African private equity

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Emerging market private equity allocation (current and expected)

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

All of the surveyed LPs expect to increase their percentage exposure to emerging market private equity over the next 24 months. African and global fund of funds (FoFs) will spearhead the increase in exposure, and expect to have roughly half of their portfolios in emerging markets private equity in the next 24 months (up from the current 42%). DFIs have expressed the least interest in increasing their emerging market private equity exposure (1% increase) suggesting that their current allocation (nearly 30%) may be nearing their allocation limits.

African private equity allocation (current and expected)

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

There is also growing interest in African private equity, with 85% of LPs indicating that they plan on increasing their percentage exposure to the continent’s private equity over the next 24 months. As was the case with emerging market private equity, FoFs expect the largest increase in African private equity allocation (5%). This compares with an expected 1% increase in allocation from pension funds, which currently have the least exposure to African private equity (1% of portfolios). This is likely due to pension fund regulations and exchange controls. The slight decrease in DFI allocation is due to portfolio realignment by some DFIs to meet prescribed targets.

Within the regional subgroups, African investors are on average expected to have the largest increase in allocation to African private equity (2% increase).

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