In Part 1 of the mini-series on Private Equity in Africa it became clear that, despite the less than encouraging numbers from the last year of PE activity, we are perhaps seeing the gradual emergence of a new wave of investment, and indeed approach, to PE on the African continent (Read the full article here).
Specialist sector and country focussed funds seem to be gaining more momentum and the outlook for the next few years is beginning to look more promising. However, there are some obvious problems that are only now beginning to be addressed that will have a lot of bearing on this hopeful outlook.
As mentioned in my previous post, there are some key underlying and ever-present issues at play including wildly fluctuating FX rates, lack of solid investment targets, difficulty finding the right talent and a burgeoning of competitor regulation and jurisprudence.
As such, I thought I would look in more depth into the area flagged closest to the heart of Freshminds; namely the difficulty in finding the right talent in PE in Africa and more specifically in finding the right management teams on the continent.
“You have to be brave to be in the African Investment market”
What became immediately apparent was that the entire panel struggled with these recruitment dilemmas. This ranged from Impact Investors trying to find the right people for a new venture or a Pension fund looking for a steady hand at the reigns; across the spectrum, there is a perceived difficulty in finding the right talent in a timely manner.
There was no clear consensus as to why this was the case, rather a lot of separate difficulties that added to the overall picture:
The centre of PE:
Market turbulence: you have to be brave to be in the African Investment market
An underdeveloped IPO market
Lack of C-Suites:
Existing deal expertise needed:
Replacing a founder:
As such, the problems are legion, but hopefully not completely unsurpassable. Having worked with roles scattered across the African continent during the last six years at Freshminds, the hope would be that, as the market improves, the talent tends to follow. As well as this, the commodities boom and the subsequent adjacent growth of 5/6 years ago certainly did create a massive interest spike and a flowing out of top talent at all levels to the continent.
So overall, the very definite hope is that those who are inherently excited by the prospect of one of the world’s fastest-growing economies and their potential to be involved with the growth of its Private Equity landscape from the ground up will find their way to Africa in the coming years.