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$1.6bn equity boost for Africa

February 6, 2014

Sub-Saharan Africa attracted $1.6 billion (R17.78bn) of private equity investment last year, the most in five years, with the East Africa region experiencing the biggest increase in deal activity, a survey has shown. However, private equity funds focused on sub-Saharan Africa raised less money year-on-year, with 11 funds taking in $922 million , down 46 percent from 2012, according to data from the Emerging Markets Private Equity Association . As one of the world's fastest-growing regions, sub-Saharan Africa has caught the attention of private equity investors, who have been encouraged by rising consumer spending and natural resource finds in countries like Kenya , Uganda and Mozambique . Given the limited number of listed companies and low liquidity in stock markets outside Joburg, Lagos and Nairobi , the asset class also offers investors greater exposure to fast-growing sectors. Deals announced so far this year include an investment in J&J Africa, a Mozambique transport firm, by Carlyle Group and the asset management arm of South Africa's Investec. Standard Chartered also said its private equity arm had taken a 13 percent stake in Botswana -listed supermarket chain Choppies Enterprises . The capital invested by private equity funds in sub-Saharan Africa last year represented a 43 percent increase from the previous year. This contrasts with emerging markets as a whole, which saw a 7 percent year-on-year decline in capital flow to $24bn . The sectors in sub-Saharan Africa which lured the most capital were energy and natural resources, with $833m invested, and banking and financial services, which drew $256m . East Africa accounted for just over a third of the 74 deals completed last year. The amount deployed to the region doubled to $769m , nearly half of the total capital invested in sub-Saharan Africa. The region has become an investment hotspot after gas discoveries in Tanzania and Mozambique and other hydrocarbon finds in Uganda and Kenya . One of the largest deals was a $600m investment led by Warburg Pincus in Delonex Energy, an oil and gas exploration company that was launched in June. Although fundraising declined last year, large sums had been raised in the past few years and were now being deployed, the survey said. - Reuters Cape Argus

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Source: Cape Argus (South Africa)

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