NEW YORK (The Deal) -- Read the rare stories from Africa to make the news in the U.S. or Europe, and you could be forgiven for thinking of the entire continent as a world of unremitting darkness, riven by violence, dominated by corrupt and greedy dictators and ravaged by biblical famines and plagues.

But the popularity of many of Africa's 54 nations as destinations for international investment in infrastructure, health care, education, telecommunications and financial services serving a growing middle class tells a very different story.

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"Africa now represents an increasing proportion of investors' private equity portfolios," said Runa Alam, nonexecutive chairman of the Africa Private Equity and Venture Capital Association, or AVCA, after her Africa-focused private equity firm Development Partners International LLP announced the final close of its new $725 million fund on April 1. "There are an increasing number of investable, high-quality companies and industries, and many exit opportunities with highly attractive multiples."

Development Partners International's announcement followed rival private equity firm Helios Investment Partners' final close in February of its third Africa fund at $1.1 billion. About $4 billion was raised by private equity in 2014 for sub-Saharan Africa alone, according to figures from the Emerging Markets Private Equity Association, or EMPEA, which include almost all of the Helios fund.

Other big funds to close in 2014 included the Carlyle Group's $698 million sub-Saharan Africa vehicle; Harith General Partners' $580 million Pan-African Infrastructure Development Fund; the $350 million Amethis Finance fund; and Investec Asset Management's $250 million Fund II.

And on April 13, Dubai-based Abraaj Group announced the final closing of its third dedicated sub-Saharan Africa fund at $990 million.

Politics and social and economic upheaval do matter, although private equity sources who contributed to this article were generally reluctant to focus on the "macro" environment, or discuss the political situation in individual countries.

DPI's announcement came in a week when Africa's largest economy elected a new president. In what was seen as a triumph of peaceful democratic change, Nigerians voted overwhelmingly to elect former military leader and anticorruption campaigner Muhammadu Buhari, ousting Goodluck Jonathan. But the new man now faces huge challenges in tackling slowing economic growth and improving governance at a time of falling oil prices and a growing menace from the Boko Haram terrorist group in northeastern Nigeria. Nobody really knows what his presidency will bring.

The announcement also came as the continent's second-largest economy -- and largest and most developed private equity and financial services market -- saw big demonstrations demanding the removal of colonial-era statues celebrating now-discredited white soldiers and adventurers. South Africa is far from the only country grappling with the legacies of colonization and often brutal European rule, nor is it the only African nation where extremes of wealth and poverty co-exist. But like Nigeria, and sub-Saharan Africa's third economic powerhouse, Kenya (which in the same week suffered a horrific massacre by Islamic terrorists operating out of lawless Somalia to the north), South Africa remains attractive to investors.

There were 42 private equity and venture capital deals with a total value of $436 million in South Africa alone in 2014, according to the Zephyr database, published by Bureau van Dijk, up from 34 deals with a value of $380 million in 2013.

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Kenya attracted more deals last year than any other country on the continent, according to EMPEA figures, overtaking South Africa for the first time. Even Ethiopia, one of a number of African countries that are definitely not part of the supposed continent-wide trend toward greater democratic participation and more accountable government, has attracted considerable investment, including a $200 million investment from KKR (KKR in rose-grower and exporter Afriflora.

"While we look at the macro and the politics, we really spend most of our time looking at companies and the ones we want to invest in," said DPI's Alam. "We're really very micro."

"We look at the projections and the visibility of those projections," she added. "Will they happen? Will something change to make that change? I will tell you that growth in our companies hasn't changed to date in the portfolio as a whole."

But the macro view is often not that different. What most investors look for is stability, if not in the whole country, then in the region where they operate. Stuart Bedford, head of Linklaters LLP corporate practice in London and a veteran of many Africa deals, put it bluntly in discussing the situation in Nigeria:

"People who really operate in the market aren't bothered by what's happening in the North and the machinations of Boko Haram," he said. "That doesn't drive investment decisions, although I can see how it's noise for people who aren't familiar with the investment environment. Lagos [Nigeria's former capital and still the most populous city and the main center of business and finance] is a world away from that.

"People are interested in Nigeria because of a macro play. There's a massive population, it's growing rapidly and [despite the current fall in the oil prices, which has hit the currency, the naira] there's a petro-currency and there's an economy that has a natural way of generating dollars. If you've found the right company in the right sector and the right people to invest in and take a five to seven-year view of your money, you ought to do reasonably well out of it."

Bedford added that even though Nigeria is a hard place to do business, where everything takes a long time and delays and bureaucratic hassle "drive investors nuts," people will stay the course to get the deal done.

"If you're looking at IRRs of 20% to 25%, because of the growth," he said, "people are prepared to take the rough side."

Some investors also believe they know the countries they operate in well enough to take a contrarian view.

London-based global emerging-markets investor Actis Capital LLP, which has one of the longest track records of any Africa investor, recently achieved an initial public offering in both Cairo and London of its Egyptian snack food business Edita Food Industries, realizing that a return to stability in the country would attract investors.

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Actis' head of Africa, John van Wyk, who does regard Boko Haram's terrorism and the civil war in Libya as "concerning" and having "an impact on business," says he draws a distinction between terrorism and political instability:

"We find very little correlation between business and investment performance, where there's political instability. In fact what it does is provide us with buying opportunities; as opposed to areas where there are acts of terrorism or outright war. We would not invest [there].

"But if you look at Egypt, which has just gone through a big political transition -- we were actually buyers of Egyptian assets in the middle of the crisis, because we were able to buy at very attractive acquisition multiples. That is because we had good on-the-ground intelligence as to what was really going on and that strategy has served us extremely well. We've made some fantastic acquisitions in Egypt when other people weren't willing to go there.

"Now Egypt's back on the radar screen for investors and we have some assets which we can exit, which we've held over the period. They have turned out to be good investments for us."

Politics and instability aside, however, there's a growing consensus that the African private equity opportunity is changing and maturing. The early fixation with oil and gas and commodities, in which Actis and others were eager participants, has given way to investments in financial services businesses such as insurance companies, card-payment processors, as well as retailers and consumer goods suppliers. These are areas in which private equity is more comfortable and can often acquire controlling stakes without the kind of massive investment required for meaningful holdings in mining or oil and gas companies.

Infrastructure, especially mobile telecommunications and the generation and distribution of energy, including renewable energy, is vital. Countries need power to grow without succumbing to the rolling blackouts that have plagued South Africa, for instance. Among the largest investments in 2014 was the acquisition by Goldman Sachs (GS and African Infrastructure Investment Managers of a stake in Wendel's Nigeria-based pan-African telecom infrastructure group HIS Holding, as part of a wider $420 million capital increase in which Wendel and co-investors Emerging Capital Partners, IFC Asset Management and Investec Asset Management also took part.

Real estate and the development of shopping malls and commercial hubs are important new areas for investment as migration to cities and urbanization accelerate across the developing world. Health care provision and education, which still stretch the capacity of the state in almost all emerging markets have become more and more important to a growing and aspirational middle class and attract investments in both English-speaking and, increasingly, French-speaking Africa.

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Development Partners International, for example, which has been investing African Development Partners Fund II since its first close in October 2013, recently made an investment in Moroccan higher education institution Université Privéé de Marrakech, which attracts 10% of its students from francophone West African nations including Senegal, Cameroon and Côte d'Ivoire. Actis similarly announced an investment in Université Centrale Group in Tunisia last year.

And such is the interest in Africa, according to AVCA director of research Dorothy Kelso, that private equity firms are attracting co-investments from limited partners in their funds, in the same way that limited partners are increasingly looking to make direct investments alongside the general partner in the U.S. and Europe. She said it was not only at the large end of the market -- or deals in the triple-digit millions -- and not just the usual development finance institutions, but insurance companies, pension funds and sovereign wealth funds.

"Across the continent, a large proportion of limited partners are looking to co-invest alongside GPs in Africa," she said.

That's a trend confirmed by Actis' van Wyk, who said there was a "constant interest" in co-investment, sometimes even from outside the firm's usual pool of limited partners.

"It's much easier to co-invest with somebody who has a strong on-the-ground presence or an existing and proven team," he said. "As a co-investor you can leverage your capital much easier with somebody who's been there and done it before. And sometimes co-investment can be a more efficient way of investing, because you don't have to have the on-the-ground infrastructure."

At the same time, the maturity of the market is now such that exits are increasingly possible through sales to other private equity houses, rather than back to the founding entrepreneur or to strategic buyers. According to a study of private equity exits conducted by AVCA in conjunction with Big Four accountancy firm Ernst & Young LLP, sales to strategic buyers accounted for 44% of African exits between 2007 and 2013, while secondary private equity investors took up just 14% of exits over the period. Secondary private equity sales were also 14% of exits in 2012. But in 2013, the proportion jumped to 22%.

And in many deals, not just in the more financially mature and conventional South African private equity market, there is now also an element of debt, according to van Wyk.

"There isn't an investment we look at where we don't have a conversation about debt," he said, adding that levels of debt would often be lower than would be expected in South Africa or in developed markets.

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Wyk did not go into detail, but according to AVCA's Kelso, there's an increasing tendency for private equity firms to put what she called "quasi equity" into transactions. These would be small mezzanine-type structures, with "redeemable features," where the investors would be getting some money back during the course of the holding period and have an equity upside at the end of the period. She also predicted that more mezzanine players would come into deals, to provide financing alongside the equity-only firms.

"So are we going to see huge leveraged transactions, as we did in the West? No, because bank debt is very expensive. Are we going to see a huge foray of debt-only investors into Africa? Probably not, or not yet, because the companies are not at the stage where they can be laden with debt. But are we likely to see a broadening of the private equity structures available? Most likely."

Last but not least, despite fears of the pervasive corruption assumed to persist in many African markets, private equity companies always insist they will not do business -- and their investors will not countenance doing business -- where there are, as Development Partners International's Alam put it, "any issues or even the smell of any issues."

Not only do investors have to be careful not to infringe the strict antibribery laws of their own countries, such as the U.S. Foreign Corrupt Practices Act or Britain's Bribery Act, it is important to maintain a reputation for probity within a country where they do business. Moreover introducing good governance to a small entrepreneurial business helps to increase its value and prepare it for expansion and ultimately for an exit.

There is increasing regulation in Africa itself, especially in cross-border deals within the East Africa Community and among the 17 French-speaking West and Central African nations which are members of the Organization for the Harmonization of Business Law in Africa, or OHADA.

DPI's Alam argues, as well, that there's a change of attitude among the younger generation of businessmen, even in places like Nigeria, which have long had a reputation for fraud and corruption.

"There's been a changing of attitudes over the last 15 years," she said. "The new generation of managers try to do business in a very proper way. Those are the companies that we would engage with."

In the minds of many outsiders, and of many Africans themselves, the continent is still a hard place both to live and to do business. But for experienced private equity practitioners and investors, there are a growing number of opportunities that make the effort worthwhile.

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