Perceived future performance of African private equity

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Perceived drivers of performance of private equity in Africa

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

When asked to identify the main drivers of private equity returns in Africa over the next 10 years, an overwhelming 69% of limited partners identified earnings growth as the primary driver of private equity returns, in line with high GDP growth rates forecast for most African countries. Limited partners indicated that the majority of businesses that can grow quickly and scale, would achieve this via organic revenue growth.

Expected returns of private equity in Africa, compared to other emerging markets

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

Overall, more than 70% of limited partners surveyed expect African private equity returns to outperform emerging market private equity returns over the next 10 years, with 24% of limited partners expecting an outperformance of 5% or more from their African private equity investments; the limited partners in this category cited the scale of opportunity as a key reason for their choice. The limited partners expecting African private equity to outperform emerging market private equity by less than 5%, cited the increased competition for deals on the larger end as one reason. On the other hand, 22% of LPs believe that African private equity will match the performance of emerging market private equity, while 8% of respondents think that African PE returns will lag those of emerging market private equity in 10 years.

Expected returns of private equity in Africa, compared to listed equity

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

African private equity returns are also generally expected to compare favourably to listed equity. Two thirds of the surveyed LPs expect African private equity to outperform their local listed equity over the next 10 years. On the other hand, 32% of limited partners have indicated that they expect African private equity returns to either match or underperform their local listed equity.

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