Funds Raised Towards Global Private Equity Declined 67% in H1’2019

By Rahab Mbiriti / Published September 30, 2019 | 6:59 am





A recent report released by Emerging Markets Private Equity Association (EMPEA), a global industry association for private capital in emerging markets, has shown that fundraising in the global private equity space has declined by 67 percent in H1’2019.

The report dubbed Mid-Year 2019 Statistics Report highlighted a significant drop in funds raised towards private equity, to USD 165.0 billion (17.1 trillion shillings) in H1’2019, less than 33.0percent of the USD 505.6 billion (52.4 trillion shillings) raised in FY’2018.

This slowdown in funds channelled towards private equity can be attributed to the general uncertainty in the global market, driven by factors such as the trade wars between the US and China, Brexit, and a slowdown in the economies of European Union countries.

From a geographical aspect, the US saw the largest level of capital raised, at USD 94.8 billion (9.8 trillion shillings), compared to Western Europe and all other developed markets collectively, which raised USD 35.8 billion (3.7 trillion shillings) and USD 2.5 billion (259.5 billion shillings), respectively.

Emerging markets raised USD 33.1 billion (3.3 trillion shillings), of which USD 1.6 billion (166.1 billion shillings) was raised by African PE funds.

This was an improvement compared to H1’2018, where African PE funds raised USD 990.5 million (102.8 billion shillings). However, there was a spike in H2’2018 where USD 2.1 billion (217.9 billion shillings) was raised.

Of the funds raised by African PE firms, buyout and growth continue to be the most favoured strategy by investors, raking in USD 783.0 million (81.3 billion shillings), followed by infrastructure and real assets, at USD 567.0 million (58.8 billion shillings).

Private equity

Venture capital still continues to struggle with growth, with only 2 out of the top 10 funds closed in Africa focused on venture capital, i.e. Partech Africa Fund and KawiSafi Ventures. It remains to be seen whether a similar spike will be witrillionessed in H2’2019, albeit this will be unlikely, given that there has so far not been increased fundraising activity in Q3’2019.

Development Partners International, a London-based Africa-focused private equity firm, in collaboration with Convergence Partners, a South-African impact investment company, have announced an investment of USD 54.0 million (5.6 billion shillings) in Channel VAS, a FinTech company with operations in Africa, Asia and the Middle East that advances micro-credit to individuals through mobile money transfer, for an undisclosed stake. Channel VAS has grown from its inception in 2012 to its current scale of 30 countries, serving over 650 million individuals in these jurisdictions, and advancing over USD 5.0 million (518.7 million shillings) daily.

Apart from cash, the company also advances loans in the form of airtime, data and mobile handsets. The funds raised are expected to be utilised in Channel VAS’ target of providing over USD 1.5 billion (155.6 billion shillings) of credit to hundreds of millions of people globally through its partrillionerships with mobile network operators and financial institutions.

This investment came less than ten months since South African private equity firm, Ethos, announced a USD 49.0 million (5 billion shillings) investment into Channel VAS for an undisclosed stake, with the funds intended to be advanced towards the expansion of Channel VAS’ footprint globally.

FinTech lending and microfinance institutions, in general, have been a major attraction for investors in Kenya and Sub-Saharan Africa. Lack of access to finance is a major issue for entrepreneurs and Micro, Small and Medium Enterprises (MSMEs) across Africa.

According to the IMF, there are 44.2 million MSMEs in Sub-Saharan Africa with a potential demand for USD 404.0 billion in financing. The current volume of financing in Sub-Saharan Africa is estimated at USD 70.0 billion signifying a huge financing gap of USD 334.0 billion. Microfinance institutions aim to bridge this gap by offering convenient access to credit.

Source: Cytonn Report Weekly #39/2019





About Rahab Mbiriti

Rahab Mbiriti is an Experienced Research Specialist working for Sokodirectory with a passion for collecting data, breaking down data and analyzing it for easy consumption. Rahab also has a passion for writing Business and Economic oriented articles.To reach her, email her on rahab@sokodirectory.com

View other posts by Rahab Mbiriti


More Articles From This Author






Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2021
  • January 2021 (182)
  • February 2021 (227)
  • March 2021 (325)
  • April 2021 (261)
  • May 2021 (285)
  • June 2021 (219)
  • 2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (321)
  • May 2020 (335)
  • June 2020 (327)
  • July 2020 (334)
  • August 2020 (276)
  • September 2020 (214)
  • October 2020 (233)
  • November 2020 (242)
  • December 2020 (187)
  • 2019
  • January 2019 (253)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (319)
  • 2018
  • January 2018 (291)
  • February 2018 (213)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (237)
  • June 2018 (178)
  • July 2018 (256)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (186)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (248)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (108)
  • May 2015 (116)
  • June 2015 (120)
  • July 2015 (148)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950