Swiss investment bank, Edmond de Rothschild has raised $530m alongside Dubai’s Abraaj Group and the US-based Carlyle Group for its first Africa-focused private equity fund, and joined a growing list of foreign investors eyeing Africa’s booming economy and middle class.
According to the Financial Times, the Rothschild fund will be managed by Amethis Finance – which is part owned by the Edmond de Rothschild Group and operates out of Nairobi and Abidjan – and will target target small and medium sized companies on the continent.
A brief by the African firm noted that, “despite years of crises, Africa has developed into a region of sustained 5.6% annual growth underpinned by deep structural reforms,” and continued by highlighting that the continent’s high growth potential has so far been only marginally addressed.
“While it is still difficult for non-specialised investors to access the African market, European or American financial players have been excessively influenced by rating agencies that underestimate the region’s return-risk ratio, regardless of the objective data available,” it added.
Just weeks ago the Abraaj Group, which manages $7.5bn in assets, also revealed that under its current plans it expects to raise an additional $500m-$750m in capital to target Sub-Saharan Africa and deploy $200m-$300m in the region from its existing funds over the next 12 months.
Abraaj partner Sev Vettivetpilla flagged four pending deals in South Africa, Nigeria and Kenya and also further highlighted the group’s additional interest in oil-rich Angola and in Ethiopia, as well as in the Ivory Coast, where the group made invested in the African Industrial Services Group (AIS) last year.
Africa attracted a total of $2.4bn in private equity funding in 2013, a figure double the previous year’s sum and almost three times the value of the $908m investment by Helios Partners three years ago, in the largest single private equity fund on the continent.
In April, the Carlyle Group also secured nearly $700m for its own first Sub-Saharan African fund, while in June, New-York based KKR invested $200m for a stake in Afriflora, an Ethiopia-based exporter of roses, and General Atlantic announced its intention to explore African deals.