Spotlight on Africa

Asante Capital is a leading independent

private equity placement and advisory group

focused on partnering with best-of-breed fund

managers in both developed and emerging

markets.

AFRICA MACRO OVERVIEW

WHY AFRICA?

Great strides in governance and political stability

Increasing urbanisation and a growing middle class have led to fast growth in consumer spending

African consumer economy could be worth $30 trillion by 2025

Rapid growth in total population will be accompanied by a growth in the working-age population

Structure of African economies shifting in favour of the resources and services sectors

Economies arguably less correlated to the rest of the world economy than other emerging markets

Countries becoming more welcoming to international investors

WHY AFRICA PE?

Local stock exchanges do not always represent all sectors and components of GDP

PE is still in nascent stages; region is expected to continue attracting investments buoyed by expectations of high returns

PE penetration still low

Marked improvement in acceptance of PE as a viable alternative to debt financing

Increasingly sophisticated and experienced local managers

Growing number of companies that can benefit from more PE ownership – professional management, strategy refinement, changes in capital structure, and the know-how and capital to become regional or global players

Sub-Saharan Africa growing in the face of China and Brazil’s shrinking GDP projec-tions. Sub-Saharan Africa estimated to grow YOY, while India’s growth remains stagnant.

FX risk remains a key risk for investors. Major emerging market economies have taken large FX hits in the past 12 months. Collectively, Black Monday & the Chinese slowdown, falling com-modity prices and a focus on when the US will raise rates have contributed to the weakening of the currencies highlighted above.

CURRENCY CHANGES AGAINST THE DOLLAR IN

THE PAST 12 MONTHS

FX RISK ACROSS

EMERGING MARKETS

GDP GROWTH: MARKET COMPS

-3.9%

-6.3%

-10.9%

-11.3%

-23.1%

-32.4%

Source: McKinsey

Source: IMF Overview of World Economic Outlook Projections Source: Asante Capital Research

Post-crisis fundraising takes hit

$7b

$5.3b

$10.6b

FUNDRAISING THROUGHOUT CYCLES

Pre-crisis levels of capital are yet to return to Africa, with less than 3/4 raised in the last 2 years compared with the 2006-2008 period in the region. Aggregate capital raised in the years post-crisis dropped by 50%.

2011-2012

2014-2015 YTD

2006-2008

WHAT CAN GPS DO TO APPEAL TO LPS?

NARROW THE FOCUS

In the current fundraising environment, it is critical for GPs to avoid racing through funds to maximize AUM. Investing and delivering tangible results in Africa takes time and your existing LPs understand that.

GPs should continually look to evolve; developing buy & build strategies, building out specialist operational teams, or narrowing scope into sector specific strategies are all potential strategic outlets for managers to explore in the region. What will ultimately win the day is consistency—of team, strategy, and ultimate returns to LPs. Africa needs to build up the trust of the international institutional LP base by delivering consistent realized returns.

LP SOURCES

OF CAPITAL

SUB-SAHARAN AFRICA CONSISTENTLY RAISING LEAST AMOUNT OF CAPITAL AMONG LEADING EMERGING MARKETS

In recent years, local capital accounts for significantly less of overall capital allocation to Africa

Europe consistently contributes roughly half total quantum of capital to the region

North America incrementally gaining comfort in the region

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2011-2012

2014-2015

Source: Preqin: Historical Fundraising, Africa

Source: Preqin: Historical Fundraising, Africa

Yet this capital is split among greater number of funds

Source: Preqin: Funds: Fundraising Statistics; * Excludes GPs with HQ outside of the region investing in the region

Source: Preqin: Funds: Fundraising Statistics