The 2015 Deloitte Private Equity Confidence Survey (PECS) is a consolidated view of how the players in the Private Equity and Venture Capital spaces view the current landscape and future for the industry on the African continent. Significantly, this survey covers Southern, East and West Africa. The views reflected on the survey represent the views of 117 detailed responses from Private Equity players in the continent’s largest economic regions, namely: Southern, East and West Africa. The responses were obtained between December 2014 and February 2015. This piece will highlight some interesting insight obtained from 2015’s PECS, which I find to be quite significant for investment on the continent.
The survey highlights the growth of private equity as an investment class in the regions concerned. Most notably, there is an expectation of growth in the asset class across all three regions with growth expectations from the respondents from West and East Africa being the highest; they expect an increase of 83% and 79%, respectively. Southern Africa displays positive forecasts yet slightly lower than those of East and West Africa at 67%.
Currently, South Africa attracts the most amount of Private Equity transactional activity (more than half of the continent’s total Private Equity transactional activity). This is credited to a combination of market size, the ease of doing business within South Africa and comparatively well-established financial institutions and corporate governance structures.
2015’s Africa PECS also revealed that in 2015, the main focus of most respondents in the three regions is the acquisition of new assets with the respondents and East and West Africa displaying a clear-cut propensity for bigger investment.
Some of the factors attracting more Private Equity players to East and West Africa are the fact that these markets lack maturity compared to those of Southern Africa and there is a growing recognition of Private equity as an effective investment vehicle around these parts.
The sectors most favoured by African Private Equity players appear to be consumer-oriented industries where food and beverages seem to be the most popular choice in Southern and East Africa, and financial services being the number one choice in West Africa.
This report reinforcing the fact that Africa continues and is increasingly becoming an investment destination, especially for PE funds. The positive sentiment expressed by respondents point to increased activity across the regions.