June 21st, 2016: In a recent Bloomberg Brief Private Equity (PE) newsletter, Ainslie Chandler reported on an interview with Hurley Doddy, Founding Partner and Co-CEO of Emerging Capital Partners (ECP), which explored PE investment opportunities in the Ivory Coast and Kenya and the current dynamics that are impacting investor appetite throughout the continent.
Mr. Doddy emphasized that the Ivory Coast and Kenya constitute key African economies that continue to experience growth. ECP’s strong presence in Francophone Africa, which has remained relatively stable due to its currency peg with the euro, has benefited expanding investee companies such as Orabank, a regional bank that expanded from five to twelve countries, and NSIA, an expanding insurance company that ECP exited in 2015. In East Africa, increased cross-border integration has contributed to a growing consumer market, mitigating regional currency weakness. ECP’s portfolio company Java House nearly tripled in terms of its restaurants from 2012 to 2015.
Mr. Doddy remarked that investor interest in Africa continues to grow as the continent has become a much more accepted investment destination among emerging markets. He indicated that while generating yields is a characteristically slow process, there are strong investment opportunities on the continent for investors who can identify businesses that have a competitive niche or are meeting unmet societal or consumer needs.
Investment trends have also shifted. Investors, particularly sovereign wealth funds, family offices, and even loyal contributors such as Development Finance Institutions (DFIs) have shown increasing appetite for co-investments as compared to three to four years earlier. Along with investor bases widening, ECP is also seeing an overall trend towards secondary deals and greater diversity in the types of funds raised, including real estate, mezzanine, infrastructure, and clean energy funds.
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