Leading fund managers discussed their unique approaches in deal sourcing, portfolio management, and exiting investments in Africa at the Harvard Africa Business Conference 2017.
Once one got past the overwhelming overuse of the word “deal” that copiously flew out of the mouths of the P.E panelists at Harvard Business School’s recently concluded Africa Business Conference, one could potentially catch a glimpse of the investment opportunity glut in the continent of Africa. Figures of funds raised for the purposes of capital injection into the African economy were quoted in the billions of dollars, 4 of which were reported to have flown into the money economy of the continent in just 2015 alone.
Panelist Ameel Somani of Helios Investment Partners shared welcoming sentiments to the thought of investing in Africa, citing the “realistic valuation” of equity that is prevalent at this point in time. He intimated an Africa that is both capital and talent short, but has enormous potential for an original flavor of investment, likening the experience to working with a blank slate. The theme of significant under-penetration of the African economy was echoed by Abraj Group’s Saqib Rashid who emphasized the abundance of funds in international P.E circles with which to inject vitality into dormant sectors of the continent’s economy.
Panelist Paul Hinks, CEO of Symbion power and chair of Invest Africa U.S.A introduced an interesting component to the aforementioned imbalance between investment stimuli and the reactionary capacity of the African economy, and that was the concept of due diligence requirements; as many as the business pitches for potential P.E deals coming from the continent of Africa are, à la Mr. Hinks, a woefully meager percentage of these meet the stipulated due diligence requirements that would render them feasible for investment. An audience member asserted that not enough potential deals from the grassroots of the continent that can not be backed by individual collateral, even make it to the discussion tables in the grand scale of all things international P.E, and this sentiment was echoed by panelist and Managing Director AFIG Funds, Mr. Stephane Le Bouder who shared his concerns for little if any mid-lying P.E firms that are interested in deals of reasonably lesser magnitudes.
Investor cultural familiarity also featured quite prominently during the proceedings of the panel; differences in risk perception between international investors for whom P.E is little more than a business venture, and an African entrepreneur whose business is her livelihood and legacy, were also touched on during the debate. Both Mr. Stephane Le Bouder and Mr. Hinks stressed particularly the challenging nature of investing in Nigeria as representative of a relatively well-to-do African economy and the former intimated the necessity of rolling up one’s sleeves and engaging with the complexities, social, political or other, of family owned companies, if one is to allay the aforestated differences, in order to make any reasonable amount of progress working in the continent.
With a plug for the African continent as a diversification option as evidenced by its relative resilience in the wake of the 2008 global economic downturn, the panel concluded its business in what was a most informative and on the whole encouraging sitting.
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