AFRICANGLOBE – One billion dollars of private equity funding is set to grow new businesses across the African continent, specialising in telecommunications and related technology, financial services and healthcare.
TPG Growth, which combines the financial might and know-how of Satya Capital and the TGP equity investment platform, is looking to make a social impact across the continent.
Tsega Gebreyes, managing partner of Satya, told reporters: “The idea is to use the combined strength of both organisations. Satya has depth of experience in Africa while TGP has the global strength.”
Gebreyes said there are challenges on the ground but that these are well understood by the experts comprising the offering. She added that the amount of capital to be invested – a potential $1bn (£630m) – is predicated on finding opportunities.
She said the skill comes from knowing where to target, since Africa is made up of many large economies, some of which are upscale and have a growing middle class. Nigeria is a focus, she said, adding that the aim will be to use large countries as bases.
Technology is an important part of the deal. TGP has lots of tech investing experience and holds positions in the likes of Uber and Airbnb. Satya has a track record in telecoms, working with mobile operators in Africa and across the globe.
“We are excited by the possibility of tech-enabled solutions. Things like payments,” said Gebreyes.
“There is opportunity for growth in mobile in Africa. Coverage itself is there, so the focus will be on things like data services. Also online trading and partnering with existing mobile operators,” she continued.
Africa has hundreds of millions of unbanked and under-banked people. They have access to a mobile phone, however, opening up a fast-growing world of payment possibilities and elegantly providing a link between the fund’s focus on technology and finance.
Indeed the next five years will see many billions of private capital, much of it VC money, flowing into applications to provide the next generation of tech-enabled finance, directly or indirectly.
Healthcare is obviously of huge importance across the continent. “We would hope to invest across the full continent. Excluding South Africa and some of the north, there is a wide gap to fill and a phenomenal opportunity – an obvious need for good reliable healthcare.
“We also have a strong track record of supplying it. And this includes healthcare insurance and the moves in the pharma sector.”
In terms of return on investment, Gebreyes maintains there are lots of ways to contribute to development in the continent.
“Building great new companies and growing employment means you can affect such a wide scale of people. The capital deployed will generate more capital.”
As far as the practical geography of the fund’s dispersal goes there will be an East Africa hub and some concentration on places like Nigeria. Gebreyes said the fund will also look to foster entrepreneurs in places like Egypt and Francophone Africa.
By: Ian Allison