African PE misses $29b pension fund opportunity

Author: Danielle Myles | Published: 9 May 2016

African pension funds are hesitating to invest via local private equity (PE) while their counterparts in developed markets continue to pour into the region, recent limited partner (LP) surveys have revealed.

Five years have passed since South Africa liberalised restrictions on pension managers’ ability to mobilise funds through the continent’s nascent PE industry. Yet a regional trade body report has found that only 21% of the country’s pension funds have increased their PE allocations since the rule changes, and two-thirds still have no exposure to PE at all.

It amounts to a sizeable missed opportunity, with some estimates that African pension funds could invest a further $29 billion in PE. With regulatory hurdles removed, the burden has now shifted to sponsors themselves.

"The private equity industry has to understand the needs and concerns of the spectrum of stakeholders who play an influential role in the allocation of capital...