David Rubenstein, joint CEO of the Carlyle Group, discussed a “great explosion of private equity” in Africa at the U.S.-Africa Business Forum. Much of this was geared toward the potential rather than the current reality, since China is the leading investor in Africa, and the U.S. trails other countries, but Rubenstein emphasized that the potential for private equity is huge in the continent.
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As a member of a panel, he said, “Opportunities are far greater than people thought a few years ago, and the great explosion in private equity, if it is going to occur anywhere in the world in the next couple of years, is probably going to be in Africa.”
The possibilities for expansion may be enormous, but the fact that only 1% of private equity investment goes to Africa shows that not much has been done yet. However, the largest U.S. private equity firms, Carlyle and Blackstone, seem ready to change that with a joint investment in African Energy infrastructure with Aliko Dangote, Africa’s wealthiest person.
Rubenstein acknowledged challenges involved in investing in the continent; “It is not easy to get control of assets. It is not easy to make the changes we want.” However, Ajay Banga, CEO of Mastercard and also a member of the panel, is optimistic, and pointed out that Africa was at the growth stage Asia occupied 15 years ago. Banja sees consumption-based growth and the rise of the middle class. He also noted a rapid growth in Africa of the use of credit cards rather than cash to make payments. Credit card purchased in Africa, Asia-Pacific and the Middle East grew 18%; only Latin America grew at a faster rate.