The preferred route to accessing African private equity

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The preferred route to accessing private equity in Africa

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

58% of the surveyed limited partners listed regional funds as the preferred route in the near term, followed by FoFs (19%) and country-dedicated funds (12%). Co-investing with general partners and direct deals were consistently of little interest to limited partners except for endowments and family offices, which did consider this a viable route.

Results were mixed at the investor group and regional subgroups level.

FoFs have a clear preference for regional funds (83% of FoF limited partners listed regional funds as the preferred primary route) followed by country-specific funds (17%). This compares to a 44% preference for FoFs as a primary route expressed by pension funds that also chose regional funds as the second preference (31%).

African LPs prefer regional funds to FoFs and country-specific funds. On the other hand, US and European LPs are likely to invest in African private equity via FoFs.

The use of consultants for African private equity

By investor group

By location

By location excl. DFIs

By location excl. FoFs

By location excl. DFIs and FoFs

About a quarter of the surveyed limited partners currently use consultants for African private equity investments. This compares with approximately 14% of limited partners who would consider using consultants, whereas 60% of the surveyed limited partners are unlikely to employ consultants. Reasons cited by the latter group include sufficient in-house expertise and/or access to industry experts as advisers through their extensive network. In addition a few respondents mentioned that some consultants are still educating themselves on the asset class.

Within the group that remains open to the use of consultants, West and Southern African limited partners have the highest representation. However, European and US investors are clearly most likely not to employ consultants, in favour of indirect access via FoFs.

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