An inaugural study entitled The search for returns conducted by the African Private Equity and Venture Capital Association (AVCA), RisCura and the South African Private Equity and Venture Capital Association (SAVCA), charts investor attitudes to African private equity.
In an industry that has been pioneered by development finance institutions, there is now a plethora of global limited partner (LP) investors in African private equity, ranging from family offices, endowments, foundations and fund-of-funds to multi-asset managers, pension funds and insurance companies.
The search for returns demonstrates that – despite the occasionally disparate nature of their investment goals – global institutional investors are extremely optimistic towards African private equity, with 85% of surveyed LPs indicating that they plan to increase their exposure over the next 24 months.
The research indicates that funds of private equity funds anticipate the largest increase in African private equity allocation (5%), compared to an expected 2% increase in allocation from pension funds, which currently have the lowest exposure to African private equity, resulting chiefly from changes to pension fund regulations and strategic asset allocation limits.
Changes to the interest and investment intentions of African pension funds could represent a new source of capital for private equity funds in Africa.
Michelle Kathryn Essome, AVCA chief executive said: “With this survey, we are confirming a significant uptick in appetite for African private equity among global LPs, particularly among the newer investors in Africa: fund-of-funds and pension funds, largely based in the US. We are also seeing an increase in the appetite of African LPs for opportunities across the continent. These trends really place a spotlight on Africa and highlight its increasing relevance as a global investment destination.”