Africa's private equity funds drop in 2005

Total amounts of private equity funds raised in Africa and overall private equity investments on the continent both declined in 2005, The Post reported on Friday.

The Zambian newspaper quoted the African Venture Capital Association (AVCA) as reporting the amount of private equity funds dropped to 557 million U.S. dollars from 971.8 million dollars in 2004.

The level of overall private equity investment in Africa fell by 27 percent to 948.3 million dollars in 2005.

South Africa recorded the highest level of investment activity accounting for 81.6 percent of the total volume of investment.

Almost two thirds of funds raised were for later stage investment. Later stage funds raised 352.1 million dollars representing 63.2 percent of total funds raised in Africa, and early stage funds saw a significant decline in 2005.

Commenting on the research, Barbara James, AVCA managing director, said "whilst early stage investment has dominated the volume of investment activity in Africa in 2005, the amount of funds raised to focus on early stage has declined significantly. This highlights a growing funding gap, which we believe needs to be addressed to help sustain economic improvement in Africa."

Excluding South Africa, the total value of private equity investment in Africa increased by 50.4 percent to 174.6 million dollars.

Source: Xinhua