You have been a leading player in the private equity sector in Africa for many years now, with key roles in many notable transactions. What attracted you to African PE work?

I joined Emerging Capital Partners in 2002, which, at that time, was Emerging Markets Partnership (EMP), where we launched the first large Pan-African PE firm. Prior to that, I was an investment analyst at Deutsche Bank in London. As such, I have an interesting and multifaceted view of PE in Africa, having been active from the very beginning of the industry. Only four African funds and management companies existed when we established Fund I. Now there are about 80 to 100 management companies and more than 260 equity investment funds focused on Africa.

Foreign investment in Africa has grown significantly over the years despite continued jurisdictional and regulatory risks, and political instability across the continent. Do you sense a change in the mood toward Africa?

The mood tends to come and go, following global macro-economic trends. There was a learning period from 2011 to 2012 onwards, when the so-called "Africa Rising" narrative became prevalent. During that period, investors began exploring Africa in more depth. We saw several billion dollars in direct funds, and IHS was certainly a major beneficiary of that. We raised US$3 billion in equity from investors all over the world between 2012 and 2014. The COVID-19 pandemic brought on a different mood, with interest rates going up and Africa's economies contracting. However, the mood is becoming brighter again as we emerge from the devastation caused by COVID-19.

Skeptics still insist that opportunities for private equity in Africa are quite limited and opportunities for exits can be particularly problematic. Do you think these perceptions are still valid?

Exit opportunities in Africa broadly can be broken down into two buckets: general exit opportunities and IPOs. ECP has completed over 40 exits so far and there are other PE firms that have sold good and profitable African businesses. The demand and ability to exit PE equity investments in Africa is definitely there, so long as the investor adheres to certain key principles and takes into account a number of factors that are specific to Africa. The narrative about lack of exit opportunities can be due to certain managers failing to manage or structure their deals properly, rather than lack of demand in the secondary market. That said, there are challenges in Africa that PE investors need to consider. For example, capital formation in Africa is less pronounced than in more developed markets, and companies have smaller budgets for M&A transactions.

With regard to IPO as an exit opportunity, the recent listing of IHS Towers (IHS)—one of the leading mobile telephone tower operators in Africa—on the New York Stock Exchange (NYSE), made history in several ways as an African IPO. It was great that we were able to list IHS on the NYSE. To be able to list in a market like the US or UK, you have to be able to adhere to the highest standards of corporate governance, as well as the financial, accounting and reporting obligations imposed by their respective exchanges. IHS was able to do that, and I think many other African companies are capable of doing that as well. I expect to see more African businesses listing internationally and, hopefully, also locally on African stock exchanges.

Besides the African stock exchanges and the NYSE, there are other exchanges to explore, not least in London and Paris, for instance. Do you think African companies will lean naturally toward the NYSE for IPOs, and what are your thoughts on the other available options?

The choice of exchange depends on each particular situation. Some countries have deep historical roots with London and Paris, including their legal systems. That does play a role. There are also challenges to consider, though. Regulatory and/or stock exchange requirements in a particular country might or might not fit with the company and shareholders' needs. In some circumstances, corporate structuring may be necessary to fit the company within the rules of a particular exchange.

New York is bigger, with deeper capital markets and more flexibility, but that does not mean that it will be the best fit for all companies seeking to list. African companies are frequently attracted to the large local exchanges because of the familiarity factor, especially the Johannesburg Stock Exchange, which has a critical mass of significant institutional investors behind it. The choice of exchange ultimately depends on the size of the company, on the exchange, the rules of the exchange and the structural changes that need to be undertaken to align the company with the rules of that particular exchange and the profile of the company’s shareholders. For example, IHS had shareholders from all across Asia-Pacific, Europe, Africa and the US. Their level of familiarity with the requirements of US capital markets varied widely. White & Case was instrumental in helping the IHS shareholders understand these issues and align them with their own local requirements.

Africa has emerged as a pioneer in financial services in several respects. The way people move money around the continent and do their banking on their mobile phones is far ahead of even more developed markets. Over the past 15 to 20 years, we have seen this transformation becoming far more institutionalized, which is a very positive byproduct of PE engagement in Africa. Africa seems to be coming of age—a good market in which to do business and realize profits—beyond just the development work that we saw in the early years. Do you agree?

Absolutely. When we first started, there was marginal interest from investors outside of natural resource companies, port/shipping, logistics and suchlike. What we have seen more recently is interest from traditional financial investors and strategic investors. We have seen a large and very consistent flow of big names into Africa, such as American Towers, General Electric and Walmart.

Financial investors, of course, come and go much more frequently, depending on how they allocate their capital. Africa is very sensitive to global macro-economic trends, and we have seen their interest go up and down with those trends. When the markets are up, extra money tends to flow into Africa. When the markets are down, that money flows back to safety—mainly to the US. However, if we take a longer view dating back before the global financial crisis and then forward post COVID-19 and until today, there is a clear, positive trend of both financial and strategic investors allocating increasing amounts of capital to Africa.

Do you see increasing trends toward a greater focus on regulatory compliance and ESG matters affecting PE in Africa? If so, how do you see your investors reacting to this?

Africa has actually been a leader in ESG for some time now, in some respects, because of the role that development finance institutions have long played as a major source of capital in Africa. We have been reporting on ESG since the early 2000s and long before markets expected businesses in Europe or the US to do this.

Regulation and compliance is a very interesting trend. Generally, the US and Europe are the trendsetters. They create regulations and compliance rules that they believe should apply in their own markets, and then these spread to other markets. What we worry about—and not just in Africa—is that companies are having to invest significant sums in compliance teams and systems to ensure adherence to these increasingly complex and burdensome requirements. This is squeezing smaller companies to the advantage of larger companies with greater resources. Smaller companies can find it extremely difficult to meet required standards, for instance, "know your customer" requirements imposed on shareholders. Requirements, for example, in one jurisdiction, can be far more onerous than those in another.