Private investment global monitor Cambridge Associates and the African Venture Capital Association (AVCA) have indicated in Africa’s first private equity index that African private equity funds outperformed U.S. venture capital over the last ten years.
The Cambridge Associates LLC African Private Equity and Venture Capital Index which was launched today at the AVCA 10th Annual conference in Cape Town revealed that private equity funds in Africa posted an 11.2 percent annualised return for the 10 years ending September 30, 2012; African private equity funds outperformed U.S. venture capital and are roughly in line with the broad Cambridge Associates emerging markets private equity and venture capital index for the most recent 10-year period; except for the most recent periods, African private equity has performed in line with or ahead of Asian and Latin American private equity.
In an official statement, the organizations also reported the index disclosed the strongest performing sectors within the private equity funds in the African index were IT/telecom, industrial, manufacturing and consumer. Other than the consumer sector, all of these have outperformed their other emerging market peers.
Commenting, Michelle Kathryn Essomé, CEO at AVCA said: “This launch marks a monumental moment for African private equity investment. For the first time, investors looking at the continent have a performance benchmark akin to those that well-established emerging markets have enjoyed for some time.”
David Wilton, Chief Investment Officer and Manager Global Private Equity at IFC added, “IFC welcomes the new African Private Equity and Venture Capital index, which is of high quality and joins the ranks of global private equity benchmarks. We expect the index to increase investor confidence, as it shows that returns from private equity in Africa are as attractive, if not more attractive than other regions.”
The African Private Equity and Venture Capital Index comprises 40 institutional-quality private equity and venture capital funds based in Africa that invest third-party limited partner capital. The benchmark excludes captive funds, real estate funds and funds with open-ended structures.
The total fund capitalisation is $7.3 billion, and the vintage years covered are 1995 to 2012. The 40 funds include investments in more than 350 companies headquartered in more than 25 African countries, as well as a small number of Africa-focused companies headquartered outside the continent.
Cambridge gathers data by tapping verifiable data sourced directly from each fund’s financial statements.
The AVCA and Cambridge Associates will issue quarterly performance data, comparing the African returns to other market indices. Returns data are aggregated to protect the confidentiality of individual funds and their underlying portfolio investments.
