African Capital Alliance has held a final close on its fourth fund, Capital Alliance Private Equity IV, on $570 million, according to a statement from the firm.
The fund, a 2014-vintage, was initially targeting $600 million. Following the final close, ACA has become the first West Africa-focused fund manager to raise more than $1 billion in aggregate capital commitments.
The fund’s predecessor, a 2009-vintage, closed on $397 million.
CAPE IV’s investor base is a “broad mix by type and geography”, including public and corporate pension funds, sovereign wealth funds, funds of funds, and development finance institutions.
Investors in the vehicle include UK DFI CDC Group, which committed £50 million, and New York State Common Retirement Fund, which committed $85 million, according to PEI data.
CAPE IV will continue the strategy of its predecessors, investing in several target sectors: Business Services, Energy, Fast Moving Consumer Goods (FMCG), Financial Services, and Telecommunications, Media & Technology (TMT).
“About a third of our fund is already committed and we continue to find compelling opportunities to deploy capital in investments which offer significant resilience and favourable growth prospects,” ACA chief executive officer Cyril Odu said in the statement.
The fund close comes amid a muted year for fundraising on the continent. In the first half of 2016 just $1.2 billion was raised by six funds, compared with $3.7 billion by nine funds in 2015 and $3.7 billion by 16 funds in 2014, according to PEI data.
This is partly because some of the continent’s major players – Abraaj, Development Partners International, Helios Investment Partners, The Carlyle Group – raised in those previous years, buoying the fundraising figures. Between them, Abraaj, DPI and Helios accounted for $2.8 billion of the capital raised last year.
Dealflow has also been sluggish. According to the African Private Equity and Venture Capital Association’s 2016 H1 African Private Equity Data Tracker, $900 million-worth of deals were reported in the first half of the year, compared to $2.5 billion for the whole of 2015 and a record $8.1 billion for 2014.
But LPs have not lost their enthusiasm for the region. According to AVCA’s annual limited partner survey, published in August, 57 percent of investors plan to increase their allocation to African private equity in the next three years, and 69 percent view Africa as more attractive for private equity investment compared to other emerging and frontier markets over the next 10 years.
More than 75 percent identify West Africa as the most attractive region over the next three years, and 71 percent are currently looking for co-investment opportunities.
Forty-four percent of investors said the performance of their African portfolio has matched or exceeded their expectations, while 60 percent cite currency risk as the biggest challenge when investing in private equity on the continent.