NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 26, 2015

Private equity firm Vital Capital Investments LP is planning a $500 million investment fund that will focus on African industries overlooked by competitors.

Vital Capital Fund II is weighing opportunities in Mozambique, Tanzania, Rwanda, Angola, Ethiopia, Uganda, Cameroon, Ghana and the Ivory Coast, managing partner Eytan Stibbe said in an interview with Bloomberg Brief Sub-Saharan Africa. The firm’s second Africa-focused fund will make as many as 20 investments in industries such as agriculture, water, education, affordable housing, healthcare and clean-energy.

“People consider those areas that we’re active in as higher risk and there are less entities involved,” Stibbe said. “It’s more difficult to attract foreign, western sources of money to these sectors to do affordable housing in rural, even urban Africa. We found that as a big need, so we decided to create Vital as a platform for Western money to be invested in Africa.”

Buyout firms raised $4.1 billion to invest in the continent in 2014, 24 percent more than a year earlier, according to Ernst & Young’s Private Equity Roundup for Africa 2015 report. David Bonderman’s TPG Capital said last week it plans to invest in healthcare, consumer and financial services businesses in Africa with Satya Capital, while Abraaj Group raised almost $1 billion for a third African fund earlier this year and said investor demand was “substantially higher.”