Bob Geldof’s African fund shows good timing

September 3, 2010

Tiring of sex, drugs and rock’n'roll, 1980′s rock icons have found a new thrill — private equity. First, U2′s Bono became a partner in media investor Elevation Partners. Now, Bob Geldof is looking to raise $1 billion for an African private equity fund, to be called 8 Miles.

Geldof’s connection with the continent goes back many years. Since organising the Live Aid concert in the mid-1980s, he has campaigned for increased aid and debt forgiveness for African nations. His political contacts should help open commercial doors.

The musician’s fundraising effort also coincides with a flurry of renewed interest in Africa. The latest cheerleader is Jim O’Neill, Goldman Sachs’ chief economist and inventor of the BRIC acronym. He reckons Nigeria, Africa’s most populous country, could rival the economies of Canada, Italy or South Korea by 2050.

Of course, Africa has consistently defied the investment optimists. Conflict, corruption and poverty have made the continent a no-go area for Western businesses and investors for many decades. But there are plenty of encouraging signs. Real gross domestic product rose 4.9 percent per year from 2000 through 2008, more than twice its pace in the 1980s and 1990s, according to the McKinsey Global Institute.

China is part of the explanation. Its hunger for commodities has sparked a flurry of investment in African resource and infrastructure projects. But, other industries have also been on the receiving end of big international investments. HSBC is set to follow the lead of UK rival Barclays and buy a controlling stake in a South African bank. India’s Bharti Airtel has just spent close to $11 billion buying telecom group Zain Africa.

Geldof will need to make sure that 8 Miles’ investments are cleaner than clean. Given his profile, any hint of dodgy practices at a portfolio company could scupper its prospects. What’s more, new European Union rules on investment funds could make investing in some African markets difficult.

This isn’t the only fund looking to take advantage of Africa’s economic development. But it will be one of the biggest and best connected. Geldof looks better placed than most to be the person to make African private equity work.

Comments

One of the things that made me choose Mark Mobius’ fund twelve years ago was the fact that he was investing in African companies. Unless Mr Geldof is intending to apply less stringent investment criteria than other funds (which would re-open the entire aid-versus-trade argument again), it’s far from clear what specific expertise he brings to the table.

Posted by Ian_Kemmish | Report as abusive
 

That’s the way to do it, Bob! Give a person a fish, and you feed them for a day. Teach a person to catch fish, and you feed them for a lifetime.

Posted by AverageOne | Report as abusive
 

Seems corruption actually helps investment. At least in Thailand, nothing that happens makes any negative impact on money flowing in for investment. Africa should make those that play such markets extremely rich seeing how how they can ‘control’ markets.

Posted by Sonnyjc9 | Report as abusive
 

i think bob geldof has done a brilllient job to draw attention of the world’s influential politians and decision makers especially the G8 to Africa’s poverty and debts. but i suggest that though clearing African countries’ debts is neccessary, opening doors to free and fair trade to African countries is more important and sustainable. Africa has a very large base of natural resources to make itself productive on all the Global Markets, but most of these are exploited by Multi-national Companies (MNC)based in the western countries to no advantage of African countries, because returns on investments are repatriated to EU, USA and Asian HQs countries.

i would like to think of the objectives of Bob Geldof, Bono (Hewson), of U2 and others; are to elevate the standards of living on the African contitnent to live up to basic humanitarian levels as in the rest of the world especially Europe, USA and East Asia. but that mission is only accomplished by treating the cause (lack of policy to regulate MNC from over-exploiting Africa, thus free and fair trade), rather than cure the itch of Africa’s insolvency, it’s just an itch.

nevertheless, Bob Geldof, you are a hero in your own right. i will support you till the end of time

Posted by shingie | Report as abusive
 

Interesting. A couple months back I was telling some friends that Africa will be the next big manufacturing hub after wages and prices go up in China.

Posted by BubbaJ | Report as abusive
 

I love Africa and all things African – and as a kin investor in emerging markets, I think the timing is perfect for Africa funds. However, with all due respects, not sure I would give much of my savings to J. Rotten & S. Vicious Capital Partners – is Sir Bob Geldof very different?

Posted by Arturo2010 | Report as abusive
 

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