The Evolving Nigerian Private Equity Landscape: Finally Coming of Age?

Posted On 19 November, 2015

INTRODUCTION

The fact that there has, over the last five years, been a shift in the balance of power from south to west as regards private equity in Africa is somewhat ubiquitous as it is underscored in virtually every recent study or report on private equity on the continent. Over the last five years West Africa’s share of private equity transactions has risen to 25% whilst South Africa’s share of transactions has decreased from 28% to 22%. Much of this shift is due to the increasing levels of activity in Nigeria and it has recently been reported that Nigeria alone may currently be receiving up to 31.4% of the total private equity investment into Africa. Private equity in Nigeria is exploding. From roughly about three general partners managing around US$75 million in 2003, the industry has grown to upwards of ten “indigenous” fund managers with more than US$2 billion under management.

With numbers like these it may be tempting to assume that perhaps the Nigerian private equity industry has come of age but looking at the numbers in a broader context reveals the truth. Granted Nigerian private equity is on the rise relative to South Africa. However, as far back as 2013, there were more than 86 fund managers in South Africa with assets under management in excess of US$11.6 billion. In 2011, private equity investments as a percentage of GDP in South Africa stood at about 0.24% compared to 0.06% in sub-Saharan Africa (prior to the rebasing in Nigeria).

In context what the numbers actually show is that Nigeria has a long way to go but it is making progress, and good progress we are bold to add!

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