Africa’s macro risks aren’t triggering secondaries

Risks like Ebola in West Africa aren’t prompting LPs to sell their stakes in African private equity funds, says Graham Stokoe, associate director of transaction advisory services for EY in South Africa. 

How would you describe the volume of secondaries transactions in Africa?

I can only think of one secondaries transaction that has come from a bank selling its private equity assets. Barclays Africa Group sold its Absa Capital private equity group to HarbourVest Partners and Coller Capital. I’m only aware of those two secondaries fund managers investing in the asset class in the region.

Do you anticipate macroeconomic risks, like the Ebola outbreak in West Africa, will trigger secondaries transactions?

I haven’t come across any investors selling private equity fund stakes because of Ebola. However, about three weeks ago I was in London and heard of LP investors conducting due diligence on potential GPs in London rather than having visits to Nigeria or other parts of West Africa.

What predictions do you have about the future of Africa’s secondaries market?

As more institutional investors enter the region, particularly from the US, there may be more secondaries activity. Most of the region’s LPs are local pension funds and for a variety of reasons, including possibly smaller fund sizes, secondaries trading isn’t taking place yet. The primary market is still maturing, and the secondaries market is likely to start to develop as the market matures.