Actis Looking to Boost African Investment

Emerging markets private equity firm Actis is looking to invest around $300 million annually in Africa, writes Reuters. Actis aims for individual investments of $50 million which means it focuses on Africa’s biggest economies – South Africa, Egypt and Nigeria where there are more opportunities for bigger deals, writes Reuters.

Reuters – Emerging markets private equity firm Actis is looking to invest around $300 million annually in Africa, with much of that earmarked for bigger markets such as South Africa, the firm’s co-head for the region said on Tuesday.

John van Wyk also told the Reuters Africa Investment Summit that even with increasing competition in African private equity, the fast-growing continent still offered strong returns.

“I tell our investors that I think Africa is still probably the best-kept secret because we continue to make superior returns,” he said in an interview in Reuters offices in Johannesburg.

Actis aims for individual investments of $50 million or more, meaning it focuses on Africa’s biggest economies – South Africa, Egypt and Nigeria – where there are more opportunities for bigger deals.

“We only really have to do probably 2 to 3 transactions a year. If we do a sizable deal in South Africa – call it $150 to $200 million dollars – and we do two $50 million deals elsewhere in Africa, that’s a good investment pace for us.”

Actis is known for sizeable deals in South Africa, the continent’s biggest economy and its most developed private equity market.

Actis, which has about $1.5 billion deployed in Africa, last year led a $434 million buy-out of South African firm Tracker, which makes vehicle tracking equipment.

Given the lack of liquidity in Africa’s public capital markets, investors are increasingly turning to private equity to tap into the continent’s average economic growth rate of around 6 percent.

The head of South Africa’s $125 billion government pension fund told Reuters last week it could invest as much as $3.8 billion in African private equity, as it seeks higher returns beyond its home market.

Exiting investments still remains a challenge for private equity firms in Africa, van Wyk said, although they increasingly see interest from Brazilian and Chinese buyers looking to get a foothold in Africa.

“Exit is one of the biggest questions we ask ourselves at the time we enter into a deal. We try and invest in businesses that will have strategic appeal to a trade buyer,” he said.

“If you’ve made the right acquisition initially, there’s no shortage of potential trade buyers when you come to sell.”