The creation of Amethis West Africa fund ushers in a new era of African private equity. We have met with Amethis West Africa’s executive director.
Leaders League. The fund Amethis West Africa has just been created. Why did you decide to locate this investment fund in Abidjan (Ivory Coast)?
Laureen Kouassi-Olsson. This implementation reflects our willingness to adopt a whole new, purely African approach. It is not possible to make long-term investments on this continent without being implemented there.
We decided to rely on francophone Africa, with which we maintain historical ties, and we have chosen the Ivory Coast, for its leading role in the UEMOA-zone economies. We also plan on opening a representative office in Nairobi, Kenya, shortly.
The fund formation is also based on the need to optimize financial resources of both the UEMOA zone and the Central African Economic and Monetary Community (CEMAC) in order to inject them into production cycles.
Leaders League. What are the fund’s objectives?
L. K-O. The CFA franc zone’s regulation is quite burdensome: the savings held by insurance companies, pension funds and the UEMOA zone other institutions cannot be invested outside the zone.
Thanks to Amethis West Africa, which is a true financial innovation and investment vehicle, the local players – or even regional – can therefore drain local savings, supply the real economy and foster the zone’s growth. The regional institutions, possessing monetary liquidity, will be encouraged to participate in Amethis West African's adventure, therefore developing a catalytic effect on the private equity’s industry.
Amethis develops an investment strategy based on long-term investment, with a different time perspective from other funds (Helios Investment Partners, Carlyle, ECP...). The fund also promotes a minority stake alongside private and institutional investors. We aim at increasing the management teams’ capacities in the companies in which we invest, and ensuring their activities’ expansion. We also expect – and accept to face some political and economic risks inherent to the countries in which we invest.
Leaders League. Where does this frenzy for the industry of private equity in Africa come from?
L. K-O. The regulatory reform on the continent, such as the Ohada Uniform Act which introduces the capital variability in corporate law, constitutes a real revolution for the UEMOA and Cemac zones’ countries.
The deleveraging of States shall also be considered, along with the significant improvement of governance.
Even though the reforms are sometimes slow and insufficient, they foster another approach based more on the partnership with the private equity.
The strong growth within the whole continent is supported by endogenous factors: the emergence of a middle-class, the complexification of consumption needs and the private sector’s dynamism arouse the private equity’s actors’ interest.
Lastly, the appearance of key actors, such as the big industrial groups in the infrastructure sector, explains this craze.
Leaders League. Does the growth of private investment in Africa support new relationships with the financial institutions?
L. K-O. The traditional donors have entered into a more balanced relationship with African States. The private capital inflows in Africa have modified some relationships. The private equity funds actually complete the traditional development assistance, which tends to stagnate or decrease. The development’s financial institutions play the arbitrator and a catalytic role for investments. Above all, they guarantee the respect of the best international standards possible and compensate the market distortions.