News and Views
Africa brimming with opportunities-Heikal
Founder and Chairman Citadel Capital, Ahmed Heikal has told senior industry leaders at the EMPEA/ Financial Times “Private Equity in Africa Leadership Summit” that private equity general partners face a vista of opportunities in North and East Africa. Speaking at a gathering of senior industry leaders in London, Heikal said, “Africa is rocking with opportunities for savvy private equity players”. On a continent where all capital is essentially growth capital, private equity general partners who have on the ground knowledge and the ability to mitigate risk can structure and execute large-scale investments that harness compelling fundamentals.
Capturing these large-scale opportunities demands ability to structure and fund complex transactions and build businesses from the ground up which is uncommon in developed markets, Heikal cautioned. “With many key industries being nearly virgin territory, growth capital is the order of the day in North and East Africa. This translates into a much higher appetite among African general partners for Greenfield investments and, as a result, longer holding periods than is the norm in the West,” he noted.
Heikal, whose firm controls investments of more than US$ 9.5 bn, participated in a panel discussion on driving Africa’s economic transformation at the EMPEA / Financial Times Annual Private Equity on Africa Leadership Summit. “Now is the time for Africa, which stands today as a one billion-person-strong consumer and will be home to the world’s largest working-age population by 2040. East Africa in particular is exceptionally exciting today,” he said, noting that, “the region’s large population, abundance of natural resources and an infrastructure base better-developed than many other regions of Africa make it home to very attractive opportunities.
With local and commercial bank funding scarce, financing large-scale private equity investments demands that GPs access new pools of capital including European development finance institutions (DFIs), Asian and American export credit agencies, and Gulf Cooperation Council sovereign wealth funds. “We refer to this as the triple combo: Investors with healthy appetites for large-scale investments that are economically transformative that build in environmental, social and governance benefits,” Heikal noted.
“ERC, for example, will help the Government of Egypt improve the environment, close its balance of payments gap, and redress a deficit market for refined products that has translated into nation-wide queues this year. Similarly, our investment in Rift Valley Railways will help the Governments of Kenya and Uganda deliver economic growth by offering far more favorable transport economics, which will ultimately help bring down the price of goods for consumers and businesses alike”,said Heikal.
The annual leadership summit, now in its fourth year, is presented by The Financial Times; this is Africa Magazine and the Emerging Markets Private Equity Association (EMPEA). Each year the summit brings together leading private equity investors who focus on how to maximize growth opportunities across the region.