Africa PE must seize platform strategies

Author: Danielle Myles | Published: 6 Jan 2016

As Africa-focussed private equity (PE) fund volumes continue to soar, their managers must pursue platform strategies to stop the accumulation of excessive dry powder.

The tactic, which involves a greenfield investment that is grown through subsequent acquisitions, has been fine-tuned by Actis in recent years. But with Africa-dedicated funds raising $3.4 billion in the first three quarters of last year alone, and the number of $200 million-plus companies (ex-South Africa) hovering around 3500, it’s clear there is too much money chasing a handful of suitable investment targets.

If general partners (GP) want to penetrate the region’s growing markets, they will have to drop the traditional buy-and-build mentality and adopt this alternative model instead. Mike Casey, senior director at the Emerging Markets Private Equity Association (EMPEA) is optimistic.

"I do think the platform company approach is something we will see more of going forward…that play where you essentially...