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Private equity a smart way to use liquidity, say experts

CAIRO: In advance of a conference next month aimed at promoting private equity and venture capital in Africa, executives briefed the media about the upcoming event. The eighth annual conference, titled “Africa: The Growth Continent for Private Equity, Investment Opportunities and Beyond, will be hosted by the African Venture Capital Association (AVCA) from Nov. 15 …


CAIRO: In advance of a conference next month aimed at promoting private equity and venture capital in Africa, executives briefed the media about the upcoming event.

The eighth annual conference, titled “Africa: The Growth Continent for Private Equity, Investment Opportunities and Beyond, will be hosted by the African Venture Capital Association (AVCA) from Nov. 15 to 17 in Cairo.

AVCA is a non-profit organization based in Africa, which is dedicated to facilitating the growth of private equity in the continent.

“From its humble beginnings, said Milton Lore, AVCA managing director, “AVCA has grown to a membership of 120 plus and we expect to have 300 to 400 representatives of investment funds, bankers, facilitators, development finance institutions, and governments, and private sector companies attending [the conference].

The 120 firms affiliated with AVCA manage a collective $5 billion.

The Ambassador of the Netherlands to Egypt, Susan Blankhart, also participated in the conference, representing the Netherlands Development Finance Company (FMO).

Blankhart hailed the conference, noting the importance of private equity firms, which she referred to as an “excellent intermediary between banks and clients.

And AVCA, she said, “serves as a platform to generate ideas and exchange knowledge on bringing private equity to Africa.

AVCA executives said they hoped that the growth of private equity in Africa would help bring methods and technologies to the continent that might solve some of the region’s basic challenges.

Southeast Asia, said Matthew Troniak, vice president of AVCA, has generated agricultural technologies that could enhance Africa’s farming capabilities. Private equity firms are one vehicle for bringing that technology to the region.

AVCA has a handful of methods for helping stimulate private equity growth in Africa. For one, it provides data and research for firms considering entering the African market. It also issues publications on the latest developments in the continent.

Furthermore, AVCA holds networking sessions – like next month’s conference – to connect private equity firms and businesses.

AVCA also works in an advisory role to governments, helping them establish business conditions that will spur investment.

Several factors, Troniak said, make him optimistic about the future of investment in Africa.

“Most of [the banks] are highly liquid. The populations are saving a lot of money in those banks, he said.

The reason the banks are so liquid, he said, is because there aren’t yet sophisticated vehicles for delivering loan products. As a result, the money sits untouched.

The growth of private equity in Africa, Troniak noted, would give banks a way to use their liquidity constructively.

Troniak also noted that the African continent seems to be stabilizing, giving investors more incentive to do business here.

The executives also discussed the need to improve transportation systems both domestically and between countries. Not only would improved transportation generate trade and business in the continent, but private equity firms also have the opportunity to invest in transportation companies.

Abdalla ElEbiary, a managing director at Citadel Capital and panel participant, said that his firm made investments in 2007 in Nile river transport systems in Egypt and Sudan. That sort of transportation investment, he said, is critical to improving Africa’s collective economy.

Topics: FJP

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