Admaius Capital’s Chigwende on private equity market in Africa
Local and international private equity firms injected $2.2 billion into African companies in the first half of 2023, according to the African Private Equity and Venture Capital Association. This amount is 52 per cent lower than that recorded in the first half of 2022. However, over the past five years to 2022, private equity investments rose steeply. Can this trend continue? Marlon Chigwende, Managing Partner at Admaius Capital spoke to CNBC Africa’s Julius Bizimungu for more.
Mon, 09 Oct 2023 10:43:19 GMT
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AI Generated Summary
- Private equity investments in Africa have decreased in value in the first half of 2023 compared to the previous year, with a notable slowdown in venture capital deals.
- African private equity transactions often focus on businesses with exposure to multiple countries, with average deal sizes ranging from $15 to $40 million.
- Admaius Capital's Vilunga Africa Fund has raised over $250 million, emphasizing the importance of on-the-ground presence in various African markets and a focus on impact investments, strong management teams, and sensible valuations.
Private equity investments in Africa have seen a substantial decrease in value in the first half of 2023 compared to the corresponding period last year. The decline has been largely driven by a reduction in venture capital deals, with the slowdown more pronounced in the venture capital space compared to private equity. Marlon Chigwende, Managing Partner at Admaius Capital, highlighted that 35% of private equity investments were made in companies operating across multiple African sub-regions, showcasing the interest investors have in businesses with exposure to more than one country. Chigwende emphasized that most private equity transactions in Africa are into businesses that have expanded regionally, with the majority of deals focusing on companies with average deal sizes ranging from $15 to $40 million. While global private equity deals in the United States are heavily focused on tech private companies due to low valuations, the African private equity landscape differs significantly due to the lesser number of listed companies and the emphasis on opportunities in the private sector. Chigwende highlighted that African private equity funds typically invest in private transactions and work closely with entrepreneurs looking to go private in the future. Notably, 90% of Admaius Capital's investments have been in private transactions, showcasing the unique nature of the African market. The Vilunga Africa Fund, managed by Admaius Capital, has already raised over $250 million, with strong support from African investors like RSSP and sovereign wealth funds. Chigwende emphasized the importance of being on the ground in various African markets to identify attractive investment opportunities, with Rwanda emerging as an attractive market due to its robust economic growth and investor-friendly environment. Chigwende also highlighted the focus on impact investments, with Admaius Capital prioritizing gender equality and financial inclusion metrics in addition to financial returns. The fund's Pan-African approach involves having multiple offices across Africa to access the best opportunities in each local market. Chigwende emphasized the importance of strong management teams, market leadership, and sensible valuations in the fund's investment strategy, with a focus on exit opportunities and long-term value creation for investors.
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