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Analysis > Interviews

Exciting time to be investing in Africa

Anna Lyudvig
Nov. 4, 2021, 5:52 p.m.
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Word count: 767

Development Partners International (DPI) has raised one of the largest Africa funds at $900m to invest in innovation-led companies. AGF’s Anna Lyudvig speaks with Joanne Yoo, Managing Director, DPI to discuss fundraising environment in Africa, ADP III’s investment strategy and opportunities.

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Development Partners International (DPI) has raised one of the largest Africa funds at $900m to invest in innovation-led companies. AGF’s Anna Lyudvig speaks with Joanne Yoo, Managing Director, DPI to discuss fundraising environment in Africa, ADP III’s investment strategy and opportunities.

Anna Lyudvig (AL): You’ve exceeded your fundraising target of $800m, please tell us about your fundraising success.  What is a key to successful fundraising?

Joanne Yoo (JY): One the main reasons for DPI’s success is that we truly understand the market, and the different regions we operate in. Many of DPI’s investment team originate from countries across Africa and have a deep understanding of the nuances of the markets we are present in. This is invaluable during the investment process and is a reason why our investors trust us as partners to invest across the continent. In addition to returns, investors are increasingly focused on Impact and ESG, both of which DPI has had embedded in its DNA and investment process since inception.

AL: What’s your view on the fundraising environment in Africa? 

JY: As shown by our latest fundraise, there remains a good level of institutional interest – our latest fund received commitments with strong support from existing investors and over 25 new investors across 20 countries.

There is also more diversity in the types of investors looking to access investment opportunities in Africa, with broad interest from institutional LPs – our investor base includes pension and sovereign wealth funds, development institutions, insurance companies, family offices, asset managers, and impact investors. Looking at our latest fundraise for ADP III, we also received several commitments from US pension funds and institutions such as The Chicago Teachers’ Pension Fund, the pension fund for the City of Philadelphia and the City of Hartford Pension Commission – all of whom were making their first ever investment allocation to Africa.

Now is an exciting time to be investing in Africa. There is a great opportunity for investors to put their capital to work and drive sustainable development across the continent.

AL: Please tell us about your investment strategy.

JY: Similar to our first two funds, ADP III will invest in Africa’s growing and established businesses, operating in industries benefitting from the continent’s fast-growing middle class. The fund will also target innovation-driven companies looking to take advantage of the increasing digital transformation of the continent.

In addition, ADP III is the first of our funds using our new, impact-focused investment approach. It aims to deliver impact through three different lenses: first, by investing in Africa, which is financially underserved, second, by focusing on specific industries with higher ability to generate impact such as healthcare, agribusiness, education, and microfinance, and third, by aligning our Impact Agenda with the United Nations Sustainable Development Goals.

The individual investment sizes generally range between $40m and $120m, however, DPI often partners with co-investors, enabling us to invest much more than this, increasing the impact we can have on companies, helping them to grow faster.

AL: In which countries/sectors do you see the most opportunities?

JY: As with ADP III predecessors, the fund will focus on a range of sectors, particularly those critical to economies across the continent and those that are driving growth. These include industries such as healthcare, agri-business, and food processing, fintech and inclusive finance.

We have a robust pipeline in place for ADP III, with several investments in investment committee stage, or under due diligence. These are varied in terms of region and focus, with opportunities across the entire continent and different sectors.

We have also seen that impact can be made in all the 29 countries where our companies currently have operations. In addition, the impact we have can differ; for example, in one country, we might have more impact on gender balance, and in another, job creation.

What challenges do you face as a fund manager in Africa? 

JY: Addressing the perception vs reality gap that still exists – once you get over this barrier the opportunities that present themselves are significant. There is still a misinformed view about the continent and the characteristics of the nations that make it up. There are still challenges that many nations have to contend with however, Africa is very much still a growth continent.

One of the most attractive attributes are the positive demographics in its favour, with one of the youngest populations in the world. Beyond this there are several rapidly developing trends that increase the attractiveness further such as rapid urbanisation, the rising adoption of technology and increased consumer spending presenting a significant addressable market of a fast growing, emerging middle class.

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