Why now?

The risk of investing in Africa has fallen markedly over the last few years as macroeconomic fundamentals, stability and governance have improved.

Many investors however remain wary, which will mean continued attractive entry valuations for investing on the continent. Generally speaking, there are market-leading companies with average entry ''enterprise-to-EBITDA'' (enterprise value divided by EBITDA) multiples still in single digits, whereas their emerging market counterparts in China and India are trading at double digit multiples. Low entry prices help to mitigate the perceived risk of investing in Africa

Limited Competition:

Despite the attractiveness of the African investment environment, South Suez Capital believes that the competition for private equity opportunities remains very limited. For example, there are around 40 or so private equity teams across the continent, compared to over 300 teams in India, yet both markets are roughly the same size as measured by demographics (a population of around 1 billion people). The relative lack of private equity capital stems in part from misperceptions of the region amongst global fund investors, but equally importantly, from the difficulty of acquiring the skill-set required for successful private equity investing, namely world-class expertise, an in-depth understanding of the African commercial environment, deep, broad local and global networks critical in investment evaluation. These factors combine to create a sustainable barrier to entry.

Long Established Private Equity Teams:

Despite the limited competition, Africa is a growing destination for private equity capital with a number of talented teams poised to benefit from the rising interest of private equity investors. Teams with long on-the-ground presence that benefit from large sources of deal origination and close proximity to local markets do exist. The focus of the Fund is to back the best private equity teams with the best track records and these include teams that are now raising their second up to their sixth generation of funds.

Low Correlation with the Rest of the World:

South Suez Capital believes that the developed world is becoming increasingly correlated to the developing world, with the S&P500 Index showing approximately 85% correlation with the MSCI Emerging Markets Index over the past five years. Africa remains significantly less correlated with emerging markets and the developed markets over the same period, providing further evidence that growth in Africa is fuelled by domestic demand.