Nigerian private equity: Outlook for 2017

Nigeria's private equity sector is facing both challenges and opportunities in 2017 amidst the struggling capital markets. Dalladi Verheijen, Managing Director at Verod Capital, shared his insights on the current state of private equity investments in the country in a recent interview with CNBC Africa. Verheijen highlighted that despite the overall economic downturn, private equity in Nigeria is still attracting capital, with several key deals being closed in 2016 and ongoing investments in various sectors. One notable deal mentioned was the $80 million investment in Beloxxi by a group of investors, showcasing continued interest and activity in the private equity space. When asked about sectors weathering the recession, Verheijen pointed to fast-moving consumer goods (FMCG), agribusiness, retail, and light manufacturing as areas of opportunity. Verod Capital is particularly excited about FMCG and retail, reflecting the potential for growth in these segments due to Nigeria's large population. Verheijen emphasized that private equity takes a long-term view, focusing on the micro-level dynamics of investments, rather than short-term macroeconomic fluctuations. Despite challenges such as foreign exchange disparities between official and parallel markets, Verheijen remains optimistic about the opportunities in Nigeria. He highlighted the importance of understanding the currency valuation when investing in the country, and the need to consider long-term perspectives to navigate the current forex challenges. Verheijen also discussed the emerging off-grid power solutions sector, noting the potential for growth in East Africa and the rising interest in sustainable energy alternatives. While Verod Capital is cautious about the power sector due to uncertainties, they see potential in off-grid solutions that offer innovative ways to provide electricity access. In conclusion, Verheijen underscored the importance of strategic investment approaches and a focus on sectors with long-term growth potential in Nigeria's private equity landscape. As investors continue to navigate economic uncertainties and forex challenges, a forward-looking perspective and sector-specific insights will be key to unlocking opportunities in the Nigerian market.