Image
Icon

Directory

IconActuaries
IconAssociations & Institutes
IconAuditors
IconBBBEE Consulting and Verification Agencies
IconBenefit Administrators & Investment Managers
IconBusiness Chambers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconCompliance
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDebit Order Collection Facilities
IconEducation and Training
IconFAIS
IconHuman Resources
IconInformation Technology and Software Partners
IconLegal
IconOmbud
IconPension Fund Trustee Liability Insurance
IconPension Fund Trustee Training
IconPension Funds Adjudicator
IconPolicy Administration
IconPolicy Trading
IconPublications
IconRegulatory Authorities
IconRetirement Funds registered by the FSB
IconRetirement Products
IconSocial Grants (Government)
IconSurveys and Research
IconTraining Courses & Workshops
IconTrust Establishment & Management
IconWellness Programs
Image
  Subscribe To »

Bright Africa continues to shine

Published

2018

Wed

29

Aug

Africa continues to turn global investors’ heads, despite its challenges.  Attracted by its many fast growing economies and burgeoning consumer and business spending – expected to reach US$6.7 trillion by 2030 – savvy investors are finding opportunities on the continent. 
 
Where to start when looking to invest in Africa? First time investors may begin by identifying the largest economies by GDP or the largest cities by population. While it’s certainly useful to explore country- and city-level detail, it may be more pertinent to start at a regional level by identifying groups of countries with similarities. In other words, segmenting the continent into meaningful markets.
 
In its latest research report on investing in Africa, Bright Africa 2018, independent investment firm RisCura does exactly that. It segments Africa into 9 meaningful markets, or regions, by analysing cultural connections, interconnectivity through trade blocs, sharing of expertise, good business relations, and relative ease of transportation, among others.
 
“Assessing Africa at a regional level gives investors a better understanding of the strengths and weaknesses of an investment destination by not only analysing the characteristics of the country of interest, but also the support that it receives from its regional partners,” says Heleen Goussard, RisCura’s head of unlisted investment services and principal author of Bright Africa 2018.
 
Institutional investors
Institutional investors are one of the main drivers of the development of capital markets and savings are the necessary ingredient for the development of institutional investors. As more people become more affluent, their ability to save will naturally improve.  In addition, technological innovations are enabling certain African pension funds to bridge the divide between the formal and informal employment markets.
According to Bright Africa 2018, RisCura currently estimates pension fund assets in Africa to be US$ 372billion, up USD 40million since Bright Africa’s initial release in 2015.
 
What are the opportunities for investing this capital? In many African countries institutional assets are growing much faster than products are being brought to market. As with previous reports, Bright Africa 2018 looks at equity investments, both listed and unlisted. 
 
From 2014 to mid-2016 African stock markets failed to grow, largely due to decreasing commodity prices and a flight to safety from global investors. In 2015 the region saw the lowest recorded growth rate since 1998. The last quarter of 2016, however, ushered in the start of the African equity recovery as can be seen from the uptick in index returns across the different regions in the Bright Africa 2018 research. 
 
According to the report, Kenya stands out as Africa’s overall winner in terms of listed equity performance. The country’s relative immunity to the commodity cycle, business-friendly environment and the continued integration of the East African Union, has resulted in relatively high levels of investor confidence when compared to other regions in the continent. These returns, however, still only represent a compounded annual return of 10% in US dollar terms.
 
Not surprisingly, liquidity and the cost of trading remain problematic when investing in African listed equities.
With regards to private equity, Bright Africa 2018 reports that the average purchase price of private companies has risen from 4.8x EBITDA to 7.3x EBITDA* between 2009 and 2017.
 
Due to this this rising trend in purchase prices, private equity funds in Africa are increasingly investing in early-stage businesses in the search for earnings growth.
 
As a large amount of investment capital has yet to be deployed by funds, purchase multiples could increase even further. Funds may therefore continue to invest in early-stage businesses as they search for earnings growth. Assuming the risks remain controlled, this could be a huge boost to African entrepreneurs who normally find it difficult to raise funding for their businesses.
 
Despite the above, number of themes unite the continent. The private equity industry continues to grow, with deal activity still increasing and asset prices remaining robust. The growth of Africa’s pensions industry and the resulting increase in local capital available for investment also provide significant opportunity. With the reversal in the commodity cycle likely to provide an additional boost, it appears that the Africa Rising narrative may be alive and well.   
 
Source: Claire Densham Communications
 
« Back to previous page Print this page » |
 

Breaking News »

Associated Compliance Newsletter 068 – August 2018

The August 2018 Associated Compliance Newsletter has been published in the Insurance Gateway® Knowledge Base. The compliance landscape has become increasingly time consuming and complex to navigate. It will ...
Read More »

  

Importance of RE Qualifying Criteria

In response to a recent enquiry from a candidate, it is important to highlight the absolute necessity to ensure that you take into account the qualifying criteria when preparing for the regulatory exams. Firstly, ...
Read More »

  

Black Business Growth Funding a win-win for financial sector black empowerment

The financial sector has four months left in which to shore up ownership and empowerment financing scores for 2018 against the targets of the Amended Financial Sector Code (FSC) by making use of the new alternative ...
Read More »

  

Land expropriation - A calming perspective

        Stop the panic over EWC, urges veteran analyst Max du Preez. Sharing an insider’s ear, he highlights practical realities          To ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Life »

Image

Short-term »

Advertise Here
Image
Image
Image
Image
Advertise Here

From The Glossary »

Icon

Convertible Loan Stock:

It is a bond that may be converted into something else on specified terms, usually into shares in the same company.
More Definitions »

 
 
By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2018.
All Rights Reserved.
Icon

Advertise

  Icon

eZine

  Icon

Contact IG

Icon

Media Pack

  Icon

RSS Feeds