Africa: Companies Vie for Honors in Private Equity Awards Africa

Winners of the 2020 edition of the Private Equity Awards Africa are set to be announced on 19 November 2020. There are 19 African focused private equity firms in the running for the house of the year position.

In the previous year's awards, the house of the year award went to Development Partners International, a firm that manages over US$1.6 billion in pan-African private equity.

Several other subcategories will rate private equity firms in terms of deal size, exit of the year, debt and infrastructure, and portfolio company of the year. The competition also includes a category for the best advisors and fund administrators.

The London Business School Private Equity Institute in conjunction with the private equity awards advisory panel will make recommendations for the deserving winners.

The ultimate winners will be chosen by an autonomous panel of judges which comprises some of the top professionals within the private equity industry.

These awards are run by Private Equity Africa, an African focused, UK based magazine. It gives news, analysis, and research on private equity transactions in Africa.

African Private Equity Investment Shows Resilience

The awards come at a time when economies have been heavily burdened by the COVID-19 pandemic. According to the African Private Equity and Venture Capital Association (AVCA), Africa's private equity industry has shown remarkable resilience raising USD 1.1 billion in the first half of 2020. This was based on 81 deals reported.

Exits were said to have dropped from 25 in the same period last year to 13 this year. This was mainly attributable to the untenable conditions created by the pandemic.

Private equity remains a crucial tool for mobilizing capital on the continent. The sheer number of the competitors vying for the top pole in the awards represents a substantial interest in private equity in Africa. It is a mechanism by which investors can access the vast opportunities available on the continent.

Africa ripe for private equity

There is enormous potential in Africa for successful long term oriented deals. In addition, the growing consumer market and middle class in Africa coupled with the higher need for infrastructural development imply a potential for private equity investment.

Rising demand for telecommunication and technology tools as well as broader financial services offerings also present opportunities within this area.

However, there is concern about the limited exit options available to investors. Of the deal exits handled in 2020, more than 80% included trade and financial buyers. According to the 2019 Emerging Markets Private Equity Association (EMPEA) Global Limited Partner Survey, Africa has proven to be the worst emerging market for realizations.

Politics and policy issues have been among the main challenges. The lack of IPOs, among the most used exit strategies, is a testament to the underdeveloped capital markets on the continent

While the content is not immune to global COVID-influenced instability, there is still scope and appetite for investment on the continent which is among the poorest in the world. The onus is on African regulators to implement measures that create a conducive environment for investment and the development of capital markets as well as improve the ease of doing business.

A future-oriented approach is necessary to see the increase in private equity investment on the continent.

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