Despite a minefield of potential political and economic risks, the outlook for emerging-market private-equity funds looks positive. Internationally, institutional investors are allocating more money to private markets to diversify their revenue streams and find alternative sources of alpha in a world of low growth. There’s also been a trend for traditional money managers to buy stakes in alternative investment firms, particularly private equity and real estate managers. And with rising political risk in developed regions such as the US and Europe, emerging markets are increasingly seen as relatively dependable investments. In the context of sub-Saharan Africa, private-equity funds offer investors access to assets that have strong growth potential in a region where stock exchanges are still developing. However, for private equity fund managers, deciding which countries and industries to invest in has become more complex. Prospects vary between countries and economic sectors, with ade...

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