Investment analysis, Bright Africa report sees improvement in private equity and capital allocation
Despite ongoing strategies to improve intra-African trade, two large economic blocks, Europe and Asia, still completely dominate imports to Africa as a whole.
According to the latest Bright Africa report compiled by investment firm RisCura, South Africa is still the largest continental contributor to institutional investments, ranked number four among emerging market economies. Overall, the continent is fragmented with large disparities between its strongest and weakest countries.
Of all imports to African countries, only 13% is sourced among African countries while around 67% comes from Europe and Asia collectively.
RisCura’s Alternative Investment Services associate, Gilbert Anyetei, said that the new Bright Africa report, released this week, highlights the marked structural differences between African regions. This investment research report provides a broad analysis of the investment landscape across the continent.
The annual research project was started by RisCura in 2013 to answer key investor questions about investing on the continent. This year, RisCura expanded the breadth of its analysis, to include inter-Africa connectivity, currency risk, sources of capital on the continent and the inclusion of sovereign bonds, real estate and infrastructure asset classes. In the past, the research covered private equity fundraising, transaction activity, pricing and investor focus in Africa.
“For investors looking to allocate capital to emerging or frontier markets, understanding the differences between the various African regions, and how these compare to their global counterparts, is crucial,” said Anyetei.
Bright Africa segments Africa into nine 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. This segmentation allows investors to more easily compare African regions to other frontier markets.
“Our research shows that there are several themes uniting the continent in 2019,” said Anyetei. “The private equity industry continues to grow, with deal activity still increasing and asset prices remaining robust.
“The growth of Africa’s pensions and insurance industries and the resulting increase in local capital available for investment also provide significant opportunity,” he continued.
Read the full report here.
Caption. Investment Management firm, RisCura’s Alternative Investment Services associate, Gilbert Anyetei.