In this two-part interview, [email protected] takes a look at the state of play in private equity in Africa and at prospects for emerging markets more generally, based on a conversation with Michael Rogers, EY’s global deputy private equity leader, and Stephen M. Sammut, senior fellow and lecturer at Wharton.
In Part I, Rogers notes that in Africa, “the PE ecosystem is beginning to mature. As that begins to improve, the capital markets improve, and I think that we’ll see a very attractive environment for private equity over time.” In Part II, Rogers notes that PE is one area where a slowing economy can also present opportunities because pricing plays such a key role in later performance. And Sammut says that while some economies are suffering at the moment, “things tend to change fairly quickly in the emerging markets. So things that look negative this year can very easily turn around in the next.” An edited transcript follows:
[email protected]: Welcome to Michael Rogers and Steve Sammut to [email protected] as they offer their views on private equity in Africa and other emerging markets. Michael is EY’s global deputy private equity leader. And Steve is a senior fellow and lecturer at Wharton. He follows private equity closely and he’s also active in the market.
Steve, you literally are just off a plane from Africa. I want to ask you for your latest impressions. And I want to give one bit of context before we start: Since 2000, the size of the sub Saharan economy has more than quadrupled.
Stephen M. Sammut: If you look at what’s happened in Africa over the last 15 years, that quadrupling is visually apparent in most of the African cities that I’ve been to. I arrived last night from Nairobi. That was my fourth trip since May there. I run a program in health care management at one of the universities, Strathmore University. And I’m very tied in with the local private equity community, which has largely been using Nairobi as a hub. So I get reports on what’s going on virtually everywhere else in Africa.
It’s difficult to explain to someone who’s not been to Africa just what’s going on. Many of us grow up with very romantic visions of what Africa is all about. The African sunset has become a cliché almost in imagery and parlance. But I think what’s really happening there is that most of those societies now have, for the most part, set aside conflicts and are in their nation-building phase.
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