South Africa has long been Sub-Saharan Africa's financial hub; however, since 2004, PE funds have expanded activity in West African markets such as Nigeria and Ghana. While Kenya joins Nigeria as what are considered the most sought-after PE markets in the Sub-Saharan, according to EMPEA, West Africa, in particular, has seen remarkable growth in recent years. These countries have witnessed a surge in PE activity from firms such as Helios Investment Partners, Adlevo Capital, Actis, and Emerging Capital Partners (ECP). Funds raised in West Africa’s PE market increased exponentially from 2013 to 2014, from US$40 million to US$271 million. Meanwhile, PE/VC investments in the West African market represented US$848 million, up from US$392 million in 2013.

Ghana is a major player in West Africa's PE growth, although investment in Ghana is often made through regional or pan-African funds, as discussed later in this report. According to EMPEA data, fund managers invested US$178.9 million and completed 15 deals in Ghana in 2014 (see Annex 2 for list of deals). When it comes to funds raising capital in Ghana-specific vehicles, there is a dearth of recent data. But this is unsurprising because the majority of investors access PE/VC investment opportunities in Ghana via regional funds. Because of the paucity of Ghana-specific vehicles, it is difficult to discern a trend within Ghana-specific fundraising. While a few country-dedicated funds have reached closes (one close of US$4 million in 2010 and one of US$1 million in 2012), the dearth of Ghana-specific fundraising speaks more to investor preference for regional vehicles rather than a decline or increase in fundraising for Ghana.

# **HISTORY OF DOMESTIC PRIVATE EQUITY/ VENTURE CAPITAL IN GHANA**

# **Ghana Venture Capital Fund, 1991**<sup>**12**</sup>

Private equity has been prevalent in Ghana since the early 1990s. In late 1991, USAID<sup>13</sup> sponsored a venture capital fund in Ghana, along with the Commonwealth Development Corporation (CDC),<sup>14</sup> to invest in private sector companies in Ghana with the potential to achieve high growth and profit. The initiative set up two companies, the Ghana Venture Capital Fund, and the Venture Fund Management Company, which were incorporated in Ghana and started operating in November 1992.

The Ghana Venture Capital Fund (GVCF), a non-bank finance company, was set up as a 10-year<sup>15</sup> closedended local currency (cedi) fund amounting to almost US$6 million, with a target return of 20 percent in US dollars. GVCF was to invest the cedi equivalent of between US$100,000 - US$500,000 in each investee company, both start-ups and more mature companies, through both equity and unsecured loans. GVCF was to exit these investments through a range of options, including listing on the Ghana Stock Exchange. CDC Capital Partners was the anchor investor in GVCF, committing US$2 million, and raising an additional US$3.8 million through additional investors, namely DEG,<sup>16</sup> PROPARCO,<sup>17</sup> SSNIT, Barclays Bank Ghana

> 12 This section draws from Extract: The Manager’s Completion report to Shareholders, February 2006.

> 13 US agency responsible for administering foreign aid.

> 14 UK Development Financial Institution (DFI) supporting the private sector in many emerging markets, with a more recent focus on Africa and South Asia (post-2011).

> 15 With the possibility to extend by up to 2 years with approval from 75% of the shareholders.

> 16 A German Investment and Development Corporation (development financial institution or DFI) and subsidiary of KfW (German development bank), which finances private companies in developing countries.

> 17 A DFI partially owned by Agence Française de Développement (French development agency) which invests in developing countries.

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