Sub-Saharan Africa has massive upside for private equity and alternative investors looking for potential exponential organic growth. In Africa, an investor can enjoy clean returns of above 30% on an investment as the asset grows with the market because there is still a lot of upside in the growing middle class. A company based in Africa operating in the right sector can grow 20 times over a period of 5 years due to just a 1% rise in the middle class. Kenya, with the rise of Cellulant and South Africa with the rise of Yoco have proven this phenomenon as these companies have recorded exponential growth over a period of 5 years and thereafter attracted large funding rounds of $48 million and $16 million respectively.
But, what makes an alternative investment in Africa in the right sector even more compelling? It definitely must be, the ability of companies to grow exponentially without the need for over-emphasis on disruptive innovation. An alternative investor in New York or London has to assess the ability of the startup company to disrupt or find an innovative needs based sector. Africa is still developing, as a result, goods and services that reach the mass market are quick to provide investor returns above 30%. Private equity and alternative investors are therefore compelled to allocate capital to African opportunities in order to generate sufficient Limited Partner returns. PEafrinsights provides a pipeline for alternative investors interested in high return investments in Africa.