Private equity discovers Africa

Marketplace Staff Jun 15, 2007
HTML EMBED:
COPY

Private equity discovers Africa

Marketplace Staff Jun 15, 2007
HTML EMBED:
COPY

TEXT OF STORY

SCOTT JAGOW: One place in the world that’s virtually untouched by private equity is Africa. Less than 1 percent of private deals happen there. But that is changing, say leaders at the World Economic Forum on Africa. Terry Fitzpatrick reports from Cape Town.


TERRY FITZPATRICK: Analysts say last year there was a five-fold increase in the number of investors looking for African companies to buy.

Political instability and volatile economies make Africa risky, but a typical takeover here will generate 5 to 6 percent more profit than deals in the U.S.

That might not sound like much, but the South African government’s pension-fund manager, Brian Molefe warned the World Economic Forum that that little something extra could lead to trouble.

Brian Molefe: When people take higher risks and they make some money, they are willing to take more and more and more risk. And that is what leads eventually a very dangerous situation. We are going to have some spectacular collapses.

A takeover failure in Africa can have a big impact because the economy here is smaller. Still, Molefe says any kind of investment in Africa is badly needed.

In Cape Town, I’m Terry FitzPatrick for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.