Increasing Capital Flows to Africa

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Perceived Risks of Private Equity Investing in
Africa

• Thomas C. Barry

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Increasing Capital Flows to Africa

• Summary Remarks
• Africa, like all venues, has risks. These risks
  can be mitigated
• Align investment with other investors and
  management
• Select businesses which minimize government
  interference, do not have economic room for
  corruption sell products/services partially in
  hard currency
• Plan exit in advance. Investee companies must be
  attractive for strategic purchaser or large
  enough to list on London Stock Exchange, ADR or
  GDR issue
• The major political and economic trends favor
  Africas integration in the global economy which
  will accelerate economic growth and increase
  valuations, both important factors for investment
  returns

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Summary Remarks Contd.

• Africa is an Attractive Venue for Private Equity
• Democracy is taking root, leading to growing
  private sector activity and transparency
• Stock markets in Africa represent a small
  percentage of GNP, thereby increasing relative
  attractiveness of private equity
• Africa consistently receives low/disproportionate
  (to GNP or population) share of global foreign
  direct investment. The scarcity of private
  equity should increase returns
• The timing is early as Africa generally has not
  been a beneficiary of globalization yet!

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