Market Trends of Middle East and Africa Private Equity Industry
This section covers the major market trends shaping the MEA Private Equity Market according to our research experts:
Increase in Capital Deployment in Africa
The African PE industry has become increasingly complex and diverse, with the arrival of global institutional investors in recent years paving the way for some of the world's largest firms to enter the market. While deal volumes have maintained an upward trend, their value has gradually decreased, suggesting growing investor interest but smaller deal sizes. Moreover, in addition to consumer-driven industries, PE fund managers have diversified their strategies to invest across a variety of sectors such as IT, renewable energy, infrastructure and real estate.
The continent's growing consumer class played a crucial role in driving much of this change, as did government efforts to move beyond commodity-based growth. This encouraged greater private sector participation and fostered expansion in a wide range of industries. Africa is among the most talked about parts of the world for private equity firms looking to invest in emerging markets. Despite the challenges to investing in the various regions within Africa, many economic indicators are pointing in the right direction and some traditional market barriers are being broken down.
New Opportunities and High Returns on Capital in Middle East
Domestic opportunities are one of the major focuses of the Middle East's growing private equity sector - as well as the increasing return or retention of capital within the region. Capital generated from the higher oil prices and economic growth within the region stays within the region rather than going abroad. That will result in more liquidity.
The Middle East has always been a very significant investor in the asset class and has been a huge source of capital for GPs in Europe, North America, and to a lesser extent, Asia. A lot of investment is really driven by the attractiveness of potential returns as certain markets open. The US and Europe are very mature in terms of private equity, their pricing is getting competitive. Asia and the Middle East probably still offer opportunities where there is good pricing potential, information asymmetry, you can get involved in potential transactions very early on and find exclusivity.
