Private equity brings hope in Africa’s tech industry

Posted on May 17, 2013 11:31 am

A recent study indicate that Africa has attracted more than one hundred private equity firms over the last one year alone. That’s a clear indication the continent offers a huge potential for growth and its corporate and IT sectors are taking off to the moneymen expectations. With large amounts of capital chasing a pool of assets across the sub Saharan Africa, it is natural that prices gone upward fast in the last few years. The good news, however, is that as the Information and technology Industry sector expands, more opportunities will open up. Private equity funds have a huge role to play in the development of Africa’s corporate sector that for long lacked capital injection. The IT industry is the main beneficiary as the sector has received much needed capital and management know how as well as financial sophistication.

The increases in the earnings of African companies explain the rise in asset prices across the continent. Several IT and finance companies, especially in the consumer and retail sectors, have done well on the back of rising purchasing power in countries like Nigeria, Kenya, South Africa and Mauritius. However, as private equity funds traditionally tend to realize their gains through initial public offerings, their participation also benefits the country’s equity markets’ as was the case with Nairobi Securities Exchange with shortlisting of Safaricom, a telecom network operator. In Mauritius, as more companies list on countries stock exchange, a comprehensive four study has shown that it deepens equity markets, in the process offering greater choice to investors in the beautiful island which is a popular business and tourism destination.

Contador Harrison