South Africa is no longer the destination of choice for private equity investors seeking to tap returns on the continent.
Buyout firms are increasingly targeting markets such as Kenya and Nigeria, where expansion this year is forecast by the International Monetary Fund to be more than double that of South Africa.
"The shift from South Africa to the rest of Africa means the way exits happen will change. You could use listings in London if you get to scale in Africa," said Andrew Dewar, managing partner of Rockwood Private Equity, spun out of Barclays Africa in 2013.
"We used to get a net IRR of 30% [in South Africa], now it's about 18% to 20%," Andre Roux, who founded Ethos Private Equity, said last week.
Nigeria has attracted US private equity firm Carlyle Group which invested $147-million (about R17-billion) for an 18% stake in Diamond Bank and said it would spend as much as $200-million in a second Nigerian company this year. Other targets for the firm include Ghana and Ivory Coast.
