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Johannesburg - From milk churning in Zimbabwe to rose growing in Ethiopia, private equity investments in Africa have returned to pre-crisis levels and should keep rising as funds seek bumper returns in far-flung markets.
Private equity deals in Africa totalled $8.1bn last year, the second highest on record after the $8.3bn posted in 2007, according to the African Private Equity and Venture Capital Association (AVCA).
This year could be even bigger as investors tired of low returns in developed markets look to cash in on the rapidly emerging middle-class consumers in Africa - home to many of the fastest growing economies in the world.
Private equity deals in Africa between 2007 and 2013 earned 60% more than the MSCI emerging market index, AVCA says.
Traditionally private equity buyouts in Africa have been supported by development organisations but there are signs over the last year that global funds are taking more aggressive steps to tap into a continent of 1 billion people.
"The growth story in Africa is compelling," said John van Wyk, head of Africa at Actis, an emerging-market focused fund with around $4.6bn under management.
"Global funds are realising they need to have some sort of Africa strategy and that hasn't always been the case."
Large U.S. private equity firms, including TPG and Kohlberg Kravis Roberts (KKR), have made their first investments in Africa over the last year.
The New York State Common Retirement Fund, one of the largest US pension funds and worth around $180bn, said in April it could invest up to $5bn in Africa over the next five years to boost returns and diversify its portfolio.
TPG said in June it would invest up to $1bn in African companies under a tie-up with Sudanese billionaire Mo Ibrahim's Satya Capital, which has interests ranging from healthcare in Nigeria to manufacturing in Tanzania.
Ethiopian roses
Investments are focused on fast-moving consumer goods, financial services, healthcare and telecommunications. Bigger funds are looking at infrastructure projects, including filling massive unmet electricity demand across Africa.
KKR last year invested $200m in Afriflora, a rose farm in Ethiopia, one of the fastest growing economies in Africa and home to the continent's second largest population.
Though interest in Africa is rising it comes off a very low base with even large funds raising only around $1bn, a meagre sum compared with developed markets
More money was raised in India last year than in all the 55 countries in Africa.
"While there has been more capital raised, it's low compared to other geographies," said Marlon Chigwende, managing director of Carlyle's sub-Saharan African business.
High returns are also far from guaranteed. Food and drinks giant Nestle offered a dose of reality last month, saying it was cutting 15% of its workforce in Africa because it had over-estimated the growth of the middle-class.
Still, middle-class households in 11 key sub-Saharan African countries, excluding South Africa, are set to triple to 22 million by 2030, according to Standard Bank.
"Things can take a long time in Africa so people should not expect instant or easy results. You have to have the knowledge and be selective," Chigwende added.
Out of South Africa
Many funds believe African investments have longevity because money is increasingly flowing to markets outside South Africa, which has the continent's most developed economy and deepest financial markets but is suffering from sluggish growth.
Nigeria and Ethiopia, the two most populous countries in Africa, are often cited as new opportunity areas.
Verod, a small Nigerian private equity firm, earned 15 times its investment this year when it sold its stake in GZI Industries, an aluminium can manufacturer.
Blackstone, which has a $5bn joint venture with Africa's richest man, Aliko Dangote, hired respected former Nigerian central bank governor Lamido Sanusi as chairman of the board of its Africa infrastructure fund this year.
Crucially, it is getting easier to get money out of Africa.
There were 40 private equity exits in Africa 2014, the highest in eight years, including the continent's largest ever when Steinhoff agreed to buy retailer Pepkor for around $5.7bn, providing an exit for private equity firm Brait.
Corporate buyers still account for half of exits but buyouts by other private equity players are increasingly common and countries like Nigeria and Kenya are promising to deepen their stock markets to make IPOs easier.
While optimism is increasing, there remain major obstacles for investors in Africa, from huge infrastructure and skills deficits to lingering political instability.
"There is risk everywhere. There is risk on Wall Street," said Muvirimi Kupara, head of Spear Capital, a Zimbabwean fund with interests in dairy processing. "He who dares wins."
