‘We now have a robust governance model, evolved from our
experiences in other emerging markets, that I’m totally confident will
protect and enhance our investments in African PE funds’ – so (mildly
paraphrased) speaks a US insƟtuƟonal investor contemplaƟng his first
commitments to the region. Well, OK, let’s wait and see how that goes
for you, we might respond.
But can we afford it? The Ɵme, to wait, I mean. As Carlyle closes
its first Africa fund, the Helios and AcƟs big deal machinery grinds
on, Abraaj remakes Aureos in its own image and ECP darts in and
out of the headlines, what does this all mean for the rest of the
SSA private equity industry? And is ‘polarisaƟon’ going to be the
key word for conference speakers when they come to prepare their
2014-16 powerpoint reviews?
Today we can feel the first rumblings of tectonic shiŌ as SSA starts
to appear on the asset allocaƟon tables of Western insƟtuƟonal
investors. Big Money. Carrying with it Big Rules; the inviolable
governance and reporƟng requirements that only a fewGP’s (roughly
speaking, those named above) can be expected to meet.
And if all this implies a sort of ‘top down’ context for the evoluƟon
of African PE, perhaps that is no bad thing. AŌer all, although the US
and European markets evolved from small to big, there is plenty of
evidence, from a number of indigenous African GP’s whose success
with small, localised funds 1 and 2 disastrously failed to carry over
to larger, broader based successor funds, to suggest that this won’t
work here.
Perhaps, though, what we need is a new model, something built
upwards not from GPs’ ambiƟons but from the intrinsic nature of
expanding African companies’ capital requirements. We all hear
grumbles of disillusionment from many insƟtuƟonal investors with
the fixed term, blind pooled fund model that has defined the global
PE industry for so long. Well, leaving aside the largest internaƟonal
deals, they don’t suit many investees either.
In this occasional series we’ll be looking at other ways in which PE
might evolve to meet the needs of investors and investees; please
do comment and contribute as we do.
Link to the arƟcle
Garry Sharp, Head of Private Equity and London RepresentaƟve Office
Guest post in Africa Assets: Garry Sharp, Head
of Private Equity and London RepresentaƟve
Office from AfrAsia Bank looks at the prospects
for the tradiƟonal PE model in SSA
Imposing a Model?
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