As credit markets worldwide teeter on the edge of meltdown and investors cast a worried eye at investment locales once considered safe but now appearing risky, a region of investment once considered solely the provenance of risk-takers and giant multinationals finds itself the target of increasing attention by private equity firms. In troubled times, Africa, it appears, has something to offer.

From their epicentre in London, firms such as Helios Investment Partners and Nubuke Investments have begun to pour billions of dollars worth of investment into Africa in recent years, a trend that looks likely to continue.

Formed by Tutu Agyare, a former board member of the investment wing of UBS, Nubuke Investments – whose name means ‘new dawn’ in the Ewe language of Ghana – focuses exclusively on Africa and is thought to have to raised more than $200m in its first round of financing earlier in 2008. Nubuke also combines philanthropic goals with its investment aims, donating part of its fees to help conduct executive education and training in Africa and thus help boost management skills there.

Established in 2004, Helios Investment Partners manages more than $575m in capital commitments on the continent while simultaneously managing a $110m Modern Africa Fund for investors such as the Overseas Private Investment Corporation of the government of the US. Across the Atlantic, Washington, DC-based Emerging Capital Partners recently succeeded in raising more than $1.5bn in its goal of investing in Africa – no small accomplishment for a firm that has only been operating for eight years.

Growth prospects

Though more noticeable in recent years, the rise of Africa as an independent investment destination for firms such as Nubuke and Helios is not without precedent. A relatively elder voice on the African scene is London’s Blakeney Management, formed in 1990, which currently has about $1.5bn under management on the continent.

In an investment memorandum, Blakeney cited “the liberalisation and private sector reform” as well as “the spectacular growth in the financial, communications and consumer sectors” taking place in Africa as some of the most encouraging qualities for investment in the region, conclusions that Blakeney is evidently not alone in reaching.

Despite conflicts currently raging in nations such as the Democratic Republic of Congo, Somalia and Sudan, burgeoning business opportunities and strengthening civil societies in other states such as Angola, Ghana, Mozambique and Senegal now appear to be more than capable of luring investors who might once have been content to ignore much of the region. With thriving automotive and electronics manufacturing industries also taking hold north of the Sahara, it appears that this trend of highly focused and disciplined investment in Africa is only likely to grow in the near future.