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The private equity firm Blackstone recently announced that it's in the process of selling its Africa-focused subsidiary, Black Rhino Group, back to management. The decision reflects another lackluster year for African PE, which has seen little growth since the 2014- 2015 fundraising boom that brought many firms into the market.

Steve Schwarzman, CEO and co-founder of the Blackstone Group. Photo: Mark Wilson via Getty Images

Background: In 2014, Blackstone acquired control of Black Rhino to invest billions into energy and infrastructure projects in Nigeria and Ethiopia, but it failed to close the large deals Blackstone was looking to finance. Blackstone’s departure comes after years of big American PE players leaving the market.

Between the lines: The mismatch between the size of available deals in African markets and the target investment size of global asset managers such as Blackstone continues to be an issue.

  • In 2017, roughly 90% of Africa-focused PE fund sizes were over $100 million, yet only about 15% of African private companies reported revenue over that number.
  • Moreover, the typical PE timeframe of a five-year holding period is often too short in African markets, where companies require more wholesale change, currency risk is a challenge, and exit opportunities are limited.

What to watch: As global PE giants leave the region, Africa-focused firms continue to grow. DPI, for example, is in the process of raising a third fund with an $800 million target. DPI and competitors like ECP, Helios, Actis, and Ethos tend to focus on smaller deals, often between $70 million and $100 million.

The bottom line: Funds that successfully tap opportunities in some of the world’s fastest-growing markets tend to share the traits of Africa specialization, patient capital, and tolerance and capacity for smaller assets. The big U.S. players appear uninterested in adapting to these realities in the near term.

Aubrey Hruby is a senior fellow in the Atlantic Council's Africa Center.

Go deeper

"Atmospheric river" to whiplash Northern California from drought to flood

A map depicting 24-hour preciptation forecast (inches) ending Monday at 5a.m. local time. Photo: NOAA

A series of powerful "atmospheric river" storms are set dump historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

10,000 trees near giant sequoia groves to be removed after fires

A firefighter looks up at a giant sequoia tree after fire burned through the Sequoia National Forest near California Hot Springs, California, on Sept. 23. Photo: Patrick T. Fallon/AFP via Getty Images

"Upwards of" 10,000 trees near giant sequoia groves have been "weakened by drought, disease, age, and/or fire" and must be removed in the wake of California's wildfires, the Sequoia and Kings Canyon National Parks announced.

Why it matters: The damage to these trees, considered "national treasures," and work to remove them means a nearby key highway must remain closed to visitors as they have "the potential to strike people, cars, other structures, or create barriers to emergency response services," per a statement from the national parks.

Obama stumps for McAuliffe, urges Virginians not "to go back to the chaos"

Photo: Win McNamee/Getty Images

Former President Barack Obama framed a Nov. 2 gubernatorial race as a bellwether for the Democratic Party and the country, telling a crowd at a campaign event for Terry McAuliffe on Saturday that "I believe you, right here in Virginia, are going to show the rest of the country and the world that we're not going to indulge in our worst instincts."

Why it matters: With just over a week to go before Election Day in the Commonwealth, McAuliffe is bringing out the big guns. The 44th president appeared on the campus of Virginia Commonwealth University to urge supporters to get to the polls.