Where are the most promising markets in Africa and what are some of the recent developments driving opportunities in these countries? How do you recruit the people and connect them with the resources to help improve the operational performance of a portfolio company and unlock value? What are limited partners looking for when selecting a private equity general partner? What types of due diligence do limited partners perform and why do the general partners that have been the most effective at fundraising share a few key characteristics?
These are all questions raised and answered by top tier professionals at this year’s Super Returns Conference held in Cape Town, South Africa. It is the largest private equity conference held in Africa each year and boasted an attendance of over 550 private equity professionals, including over 150 investors and over 200 investment managers. Already running in its 5th year, the Super Returns conference also attracts a large number of start-ups and support service firms, such as lawyers, consultants, and accountants. This created a very vibrant environment and lent itself to some very interesting exchanges and connections during panel sessions, as well as networking breaks.
During one panel discussion, several private equity fund managers debated the merits of a country or regionally focused fund versus a pan-African strategy. As the moderator, Aubrey Hruby, tried to stoke a debate, it was evident that the panelists respected the many factors that go into deciding a fund’s scope. Paul Kavuma, who manages an East Africa focused fund, stressed the importance of local knowledge and warned against being more than a 2-hour flight away from a key investment’s headquarters. On the other hand, Magchiel Groot of FMO, who manages capital on behalf of the deep pockets of the Dutch Government, raised concerns over the depth of opportunities within any single African country and expressed skepticism of the ability to deploy significant capital in a restricted region and achieve sufficient diversification in such risky markets.
In another discussion, Eric Kump of Carlyle responded to an audience member’s question about the need for private equity investment firms to push their portfolio companies to adopt best practices. While acknowledging that some of the value-add a marquee private equity firm can bring to a portfolio company is their awareness of how to achieve high standard business practices, he added the caveat that their role as an investor is to coach management as partners on the board but must allow management to take responsibility for implementing what they deem best.
I left the conference with a wealth of new information and understanding of the current context private equity firms in Africa are operating in, as well as an appreciation for the beauty of Cape Town.