Private equity funding to bridge Africa’s infrastructure deficit
Private equity investors are increasingly becoming more active in Africa’s bid to narrow the $90-billion-a-year infrastructure funding gap constraining the continent’s growth.
This was according to a survey by the Southern African Venture Capital and Private Equity Association (Savca) and KPMG, which found that, during 2013, 23% of the R162.2-billion in assets under management were from funds with a dedicated infrastructure mandate.
The 2014 Private Equity Industry Performance Survey showed this was an 18% increase on the prior year.
Infrastructure assets in Africa offered private-equity-style returns and enabled private equity groups to invest in scale, explained Savca CEO Erika van der Merwe.
“Private equity funds from various regions – including Southern Africa – are funding infrastructure projects across sub-Saharan Africa in the energy, transport and information and communication technology [sectors],” she said.
However, the bulk of the current investments were directed towards the power sector, particularly renewable energy, with smaller projects favoured over the complex and difficult to manage “traditional” power projects.
Van der Merwe pointed to the benefits of infrastructural investment for cross-border investments and regional integration, with the potential opening up of new opportunities for peripheral investments.
“Private equity investment in Africa can serve as a catalyst for development on the continent in a way that fosters the achievement of targeted and specified developmental goals,” she concluded.
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