African CEOs are in the mood for partnerships
By Jaco Maritz, howwemadeitinafrica.com
African companies are
looking for partners, with nearly 50% of them planning to pursue a joint
venture or a new strategic alliance in the coming year. More than 25%
of CEOs are anticipating an acquisition, primarily in their home market
or in the rest of continent.
This according to a new survey by PwC, The Africa Business Agenda, that features the opinions of 260 company heads from across the continent.
PwC says the main challenge for African CEOs seeking partners may not be financial, but operational.
“They will have to adopt the right approach and business model to
launch new ventures, choosing between trade agreements, joint ventures,
contractual partnerships – or M&A operations – and they will have to
make sure that these operations can deliver the value they are
expecting,” say Emmanuel Le Bras and Hervé Demoy, partners with PwC
France.
There is a rising interest from international companies to invest in
the continent. While these companies can provide a welcome capital
injection, there will also be a necessity for African companies to align
with the business standards of these global firms.
Some 74% of respondents in PwC’s 16th Annual Global CEO Survey,
published last year, said they expect to expand their footprint in
Africa, although only 13% of them currently have a presence in the
continent.
The past year has seen a number of international joint ventures in
sectors such as food and beverages, animal feed, IT, business services,
media, engineering and resources.
PwC says success factors for these partnerships include a clear
definition of roles and responsibilities between partners, strong
involvement from each of the stakeholders and capacity for partners to
build trust and clear governance rules, processes and performance
management systems.
Private equity: an instrument for growth?
Although private equity penetration in many African countries remains
low, the industry is expected to see continued growth over the coming
years.
While private equity firms such as Emerging Capital Partners, Actis
and Helios have been doing deals on the continent for a many years, new
players are also entering the space. For example, New York-based private
equity giant KKR recently invested in an Ethiopian flower business.
“There is something happening, there’s a significant structural shift
and we think it’s there to stay. And yet when you look at the amount of
private equity capital that has actually come into the [African]
continent annually over the last ten years, it has grown a little bit
but it hasn’t really spiked. So we think the opportunity is still very
early. And for people who get in now, the view through the windscreen is
a lot brighter than what you will see in the rear view mirror,” said
Kola Olofinboba, head of Fairview Capital’s Africa practice at a recent
industry event in New York.
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