Stories private equity is looking for in Africa

Businesses: –    The business model is scalable –    There is a compelling case that there is large latent/unmet demand for the product/service –    Competition is underperforming/non-existing and barriers to entry are high –    Competition for financing a given firm is low (don’t want to enter a bidding war) –    Strong personal relationships with management –    Strong balance sheets for financial institutions (diligence their Accounts Receivable and recovery rates) –    Strong Debt Service Coverage Ratios for mature businesses Economies: –    Rapid growth in the urban middle class – rapid demand growth from the latent baseline –    Large domestic market –    Rule … Continue reading Stories private equity is looking for in Africa

African cleavages

New to Sub-Saharan Africa but bitten by the private equity bug that says invest to capture its growth? Visualising SSA as one monolithic entity and having difficulty in breaking it into digestable parts? Here are a few cleavages to consider to get you going. Distinguish consumer markets with a lot of growth potential (economic growth rate, population size, political stability) from those that don’t Distinguish promising PPP partners for large infrastructure projects (political stability, foreign reserves, track-record for relations with infrastructure investors, BITs) Political stability: Read political histories of particular countries by reading books Follow Al Jazeera, Jeune Afrique/The Africa … Continue reading African cleavages