Ethos Private Equity Limited, South Africa’s oldest private equity firm, is targeting investments in parts of the continent where oil-driven economic growth and a rising middle class are boosting demand for goods and services, according to Bloomberg.
The Johannesburg-based firm, which said on Wednesday it raised $800m for a sixth fund, expects to deploy the cash in the next three to four years in countries such as Kenya and Tanzania, Chief Executive Officer Andre Roux said in a telephone interview from the South African city yesterday.
“In a world starved of growth, sub-Saharan Africa has become an investment bright spot,” Roux said, referring to economic growth in African countries of between five per cent and six per cent. “The consumer is clearly an important area of growth but that’s not just limited to retail, but to industrial services that serve the oil industry.”
Kenya, which announced its first discovery of oil last year, and Tanzania, which has offshore gas reserves, are two countries where growth could mirror that of oil-rich West African nations, Roux said. Ethos will only consider raising more funds after it has spent at least 70 per cent of its existing undeployed cash and is also reviewing exits from investments made for the previous fund, Fund V, he said.
“In the medium term the big boost is oil in Kenya and continued exploration for oil in Uganda,” a portfolio manager at Old Mutual Investment Group South Africa, Cavan Osborne, said in a telephone interview from Cape Town on Thursday. With African stock markets often being small and illiquid, private-equity firms have a role to play in accessing some of the continent’s growth opportunities, he said.
Sub-Saharan Africa’s gross domestic product will expand 5.7 per cent in 2013 as commodity prices rise, making it the second fastest-growing region after developing countries in Asia, the International Monetary Fund said on October 9, 2012. Kenya, the biggest economy in east Africa, is forecast to grow 5.6 per cent in 2013, more than the 5.1 per cent estimate for last year, the IMF said.