Expert advice: What to consider when structuring an African investment fund

Home|Expert advice: What to consider when structuring an African investment fund

Investing in Africa has changed radically over the last decade. The boom period might be over but there are still opportunities if you know where to look – and if you have the right advice about setting up the best possible structure for your investment fund.

Patrick Colegrave is our guest on the latest Opportunité Africa podcast. He’s an expert in international corporate legal affairs at Forbes Hare and he splits his time between Singapore and his home country of Zimbabwe.

‘Africa is generally considered high-risk for investment, but it’s a diverse market with 54 countries and a young, growing population,’ he says. ‘It’s also underdeveloped, which presents a range of opportunities.’

‘There are several important factors to consider when setting up an African investment fund. Fund domicile is crucial: Mauritius, the Cayman Islands, Luxembourg, Ireland – even a Singapore-based VCC… Each has its own challenges and advantages, depending on the nature of the source funds and the requirements of your target investors.’  

‘Other factors to consider include double tax treaties and investment protection treaties in overall structuring, as well as the type of fund vehicle, the fund duration, the fees and the exit strategies. Historically, private equity funds have been most prevalent – particularly limited partnership structures – but investment holding and permanent capital vehicles are becoming more popular. And many investors are finding that the traditional private equity model has limitations that may not suit the longer investment cycles required in the African space.’  

‘Overall, fund managers must carefully consider the specific circumstances and opportunities they’re looking to develop, and tailor their fund strategy accordingly.’

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