Eaton Towers is largest private equity investor in Ghana

Eaton Towers, mobile tower co-location and services company is the highest private equity (PE) investor in Ghana in 2011, Ernst & Young (E&Y) has said.

The company invested $150 million in Ghana by September 2011 through investment company Capital International Inc.

By E&Y’s analysis Africa is benefiting from a global trend that is seeing more investors seeking growth from a wider range of markets.

“Five years ago, just 10% of global fundraising was earmarked for the emerging markets. But by 2011, 17% of the total capital raised by PE firms worldwide was targeted towards emerging markets, the highest percentage on record,” it says.

According to the accounting and research firm, in 2007, sub-Saharan Africa accounted for approximately 3% of total emerging market fundraising. By 2010, this had doubled to 6%, it says.

With GDP growth rates below 2% across most of the developed economies, Africa’s attractiveness is readily apparent. The region’s share in global FDI projects per annum increased from between 2.7% and 4.4% during 2003–2007, to between 4.5% and 5.2% during 2008–2010. The number of new FDI projects increased from 280 to 460 projects per annum during 2003–2007, to between 600 and 850 projects per annum during 2008–2010, it adds.

It also believes that rapid growth and stabilizing political situations have emerged as key drivers of PE investment Africa. It indicates that these developments are increasingly suitable for PE investment, as evidenced primarily by its outsized growth relative to the developed markets and other emerging markets.

“In sub-Saharan Africa in particular, GDP growth is expected to average 5% over the next 10 years, significantly higher than the 2.5% expected in the US, and the 1.5% expected in Western Europe,” it says.

While acknowledging that private equity investors have long been a part of Africa’s economic landscape, with firms like Helios Investment Partners (Helios) and Actis Capital (Actis) raising funds and executing significant transactions in the region, E&Y indicates that broader recognition of Africa’s growing economic strength is prompting a new wave of activity, as general partners (GPs) and limited partners (LPs) alike take a closer look at the region’s wide array of opportunities.

“Africa has stepped into the limelight as a more prominent emerging market player. In this report, we look at some of the factors that are driving PE’s rapidly increasing interest in Africa — from the already established and growing market of South Africa, to the frontier markets such as Nigeria, Ghana and Kenya,” it says.

PE firms, E&Y notes, are attracted to the region’s high growth rates and nascent shift from commodities and agrarian-based economies to consumer economies, driven by a growing middle class. As the PE industry undergoes its own expansion, diversification and maturation, Africa will play an important role.

The total value of PE transactions in Africa continues to rise, it adds.

While South Africa attracted the greatest PE investment over the last two years, investor interest in opportunities outside of South Africa is increasing.

According to the Emerging Markets Private Equity Association (EMPEA), the value of PE investment in sub-Saharan Africa rose 38% in the first half of 2011 from the same period a year ago ($186m to $256m). This increase took place even though the number of deals in the region fell from 25 transactions in the first half of 2010 to 21 in the first half of 2011. By the beginning of December 2011, investments in sub-Saharan Africa had reached approximately $1.7b.

By Emmanuel K. Dogbevi

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