Is it time for long-term investments in Africa for a future worldwide economic booming?

That's the question that was in my mind, during my participation at a special LBS Coller Institute of Private Equity session, and I was honored to listen closely to The Right Honourable Andrew Mitchell, The UK Minister / Secretary of State for International Development.

The Rt. Hon. Mr Andrew Mitchell and I

The Rt. Hon. Mr Andrew Mitchell, spoke in a roundtable discussion, with most important Private Equity players and Venture Capitalists at the London Business School, he emphasized that now “Africa is a continent of innovation, enterprise and opportunity“, and urged businesses globally to seize those opportunities offered by African markets, and highlighted the pivotal role of the African private sector in global economic development, especially in the current context (western economic saturation).

Speaking in the same roundtable, Mr. Tony Elumelu, Chairman of HHL (Heirs Holdings Limited), he encouraged private sector business leaders to join him as partners in launching sustained, economic investments for Africa by contributing their resources and experiences. “Africa’s investment landscape is changing, there is a growing appetite for long-term investments that catalyze growth in the private sector” and “only in the context of a genuine private sector partnership can we create enabling environments for investments that will meet Africa’s demands for economic transformation and social impact in a sustainable way”, HHL Chairman said. As a leading spokesperson for the private sector in Africa, Mr. Elumelu, was invited by the LBS and DFID to share his thoughts in response to the Minister’s long speech on Africa as a continent of economic growth and a new place of innovation. Finally, the keynote address of the HHL Chairman at the event served as a platform for dialogue between the private sector players and policy makers to continue to discuss ways in which to create partnerships in Africa that eliminate bottlenecks and increase both the economic and social wealth of the continent.

This Private Equity and Venture Capital roundtable discussion was a clear recognition of the importance of Africa in UK priorities and the ability of the private sector to accelerate socioeconomic development of the continent and then enhance the worldwide economic development.

Brahim ELAZZOUZI (B.Elazzouzi@LSE.ac.uk)

Is African-11 a real alternative engine of BRICs and N-11 ones?

The world is waking up to a new Africa. The predominant theme in the emerging narrative is no longer war, famine and disease but rather strong economic performance. The resources industry has played an important role in this shift but economic diversification is coming to many African countries, where an expanding consumer base is fuelling growth in other sectors. And measurable improvements in governance and human development suggest that these changes will be lasting.

Investors are realizing that Africa is good for business. Strong economic growth, business friendly reforms, mature financial institutions and some large economies (Morocco, Algeria, Nigeria, Egypt and South Africa among them) add up to an enticing proposition. It is no wonder that foreign investment in Africa is showing strong growth and that returns on investment in Africa, both foreign and domestic, are among the highest in the world.

Increased investor interest is having a beneficial impact on many African countries: business is good for Africa. Investment is creating jobs which have a wide ripple effect. And foreign companies are helping to develop domestic industries through the transfer of skills and technology and by generating demand for extended supply chains.

A sharper investor appetite for African opportunities is sparking a virtuous circle of developments. As companies wake up to Africa’s potential, they are making investments which develop local industries. As those economies grow, they present yet more opportunities to investors and spur governments to make their business environment more attractive to investors.

Africa has turned a new page. The prospects look bright and this is only the start of the story.

Sources:
-“How Exciting is Africa’s Potential,” Goldman Sachs Strategy Series
-“Emerging opportunities for business and Africa”, Ernst & Young New Africa Series

Brahim ELAZZOUZI (B.Elazzouzi@LSE.ac.uk)

M&A PMI

Historically, we can assume that the PMI (post-merger integration) is an important key for a successful M&A:

-In almost 60% of all cross-border transactions, the acquiring company did not earn back its cost of capital

-Over 50% of mergers failed to reach goals set by top management

-Deal costs were recovered within 10 years in only 23% of all transactions

-50% of transactions result in same or lower profits

-Of 150 recent deals about half destroyed shareholders wealth

Sources: External Surveys by ATKearney

Brahim EL AZZOUZI

M&A Integration Planning

Integration planning is a very critical activity inside M&A strategy

1: Clearly define and gain agreement to the strategic rationale for the integration

2: Identify the full range of projects to deliver cost efficiencies and revenue growth

3: Maintain a separate focus on business as usual to minimise impact on business performance

4: Define the future business operating model and transformation roadmap

Brahim EL AZZOUZI