Private Equity Africa Fundraising Forum
“You never really know a person until you give them your money.”
On 14 October, Mishcon de Reya hosted an event in collaboration with Private Equity Africa, inviting leading private equity experts from the media and marketing industries, family office advisers, auditors and tax consultants, as well as various private equity firms.
The event began with Tim Flood and Charles Fox from our funds and financial services team delivering a talk on investor protection provisions, before guest speakers from Trident Fund Services enlightened the audience on diverse fund structures and the key investor considerations in respect of them. Both presentations set the scene for the lively panel discussions that followed.
In a dynamic debate, representatives from leading private equity magazines Real Deals, Unquote and Private Equity Africa discussed investor and fund relationships with the media. They gave interesting insights into specific strategies that funds could use to help improve perceptions on investing in Africa. The need for funds to engage investors with a clear structure setting out the opportunity, the strategy and how the plan proposed would be executed, was clearly emphasised. As an emerging market, Africa was regarded as a positive opportunity for investors to bring about growth and social benefit, and, in turn, a catalyst to compelling investment. The panel highlighted that building relationships with journalists is the best way to drive positive PR around your fund.
Further discussions explored the option of raising capital from family offices, with the panel featuring representatives from Niveda Group, Kingdom Capital Partners and independent private equity advisor, Arjette Van Den Berg. The flexibility of family offices, arising from the fact that they are less process orientated, open to exploring new options, and able to work alongside the general partners of funds, was emphasised as their main attraction to investors.
Mishcon de Reya Partner Kevin McCarthy said that family offices often take a longer term view, which brings additional flexibility. “It tends to take longer to make decisions, but they more informed and tend to stick.” Saftar Sarwar from Kingdom Capital Partners pointed out that African family offices were unique in that they were less driven by metrics and more focussed on social return, such as the alleviation of healthcare and poverty.
To complete the picture, Asante Capital and Hamilton Lane expressed the viewpoint of Limited Partnerships (LPs) on private equity investment in Africa. Whilst different LPs were willing to take on different levels of risk, almost all prioritised the need to receive a firm understanding of the strategy, opportunity and value of the investment. A common issue with start-up private equity funds highlighted was corporate governance and the change in control of assets.
A further issue with private equity investment in Africa, which was outlined by various panellists throughout the day, was the added layer of risk associated with emerging markets. This means that the due diligence process would often be lengthy and time consuming. Various problems associated with corruption, such as money laundering, sanctions and human trafficking, require particularly elaborate due diligence. Therefore, in Africa, due diligence would often focus on politically exposed persons, labour disputes, health and safety breaches, hidden political interests etc. For example, un-receipted and unauthorised donations to charity were identified as a clear mechanism for corruption, and the panellists emphasised that investment could be impacted more by changes in political dynamics and personal loyalties between people than institutional issues.
The talks and discussions throughout the day shed light on the most important issues concerning private equity investment in Africa, and provided insight into the perspective of all players in the process. Followed by a drinks reception, the event also provided an opportunity for guests to exchange ideas and opportunities for investment into this exciting emerging market.