Private Equity (P.E) firms are important to the economic growth of any country. More importantly for businesses who are looking for non-debt funding and can’t seek equity from the stock market, P.E firms represent a suitable investment source. Most P.E firms have investment bands that usually do not go below N1b (even though some can invest in tranche’s of say N100m) which makes them a very attractive way of sourcing money. P.E firms, for example have been involved in a lot of businesses spanning several sectors. Real Estate, Banking, Road Construction,Telecommunication etc deals have mostly changed the landscape of Nigeria. From The Palms Mall, to Lekki Express way construction, to bank recapitalization to GSM and CDMA services all had some form of P.E Investments. It is therefore easy to see important it is to the very fabric that our corporate life is made up.
So where exactly does Nigeria stand in P.E investments when compared to other African Countries?? According to the Emerging Market Private Equity Association (EMPEA), Nigeria ranked 2nd to South Africa as per investment received between 2008- Q3 2011.
From above, Nigeria has received $721m (N115.3b) using N160 as ROE, less than half of what have gone to South Africa. The report which I find interesting, mentions several regulatory factors that determine the level of P.E a country attracts.
P.E Investments seem to be dropping in Africa as a whole as the chart below suggest. This could be attributed to the global slow down which have impacted on investment across borders. Or is it??