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Africa private equity fundraising to fall this year

[NAIROBI] African private equity funds are likely to raise less cash for investment this year after a bumper 2015, the African Private Equity and Venture Capital Association (AVCA) said.

Private equity funds investing on the continent closed funding rounds worth US$4.3 billion last year, up from US$1.9 billion the previous year, AVCA said in its Annual African Private Equity Data Tracker seen by Reuters on Tuesday. "2015 was a bumper year for fundraising, with a handful of large funds achieving final closes during the year," the association said. "As such, 2016 is likely to see lower fundraising totals."

The value of private equity deals in Africa dropped to US$2.5 billion last year from US$8.1 billion in 2014, though there were more deals worth less than US$250 million.

Ayisi Makatiani, managing partner and chief executive of Nairobi-based Fanisi Capital, said there was usually a lag between fundraising and investment activity, adding that the increase in smaller deals was a positive sign. "Maybe it is evidence of a healthy economy at the small and medium enterprise level, pointing to big deals in the future,"he told Reuters.

Deals announced during 2015 included PCM Capital Partners investment in the Azalai Hotels group of West Africa and 8 Miles investment in Orient Commercial Bank in East Africa.

AVCA said Africa's burgeoning population meant investments were likely to be focused on consumer-driven sectors over the medium term. "Other sectors that may be of interest include infrastructure, real estate and energy," it said.

A total of US$16.2 billion has been raised by Africa private equity funds between 2010 and 2015, AVCA said, adding there were 823 private equity deals worth US$21.6 billion during that period.


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