Citigroup has joined forces with one of Africa’s leading private equity groups to invest at least $200m in the continent, the biggest bet to date on the future of African growth businesses.

CDC, a private equity investor owned by the UK government and formerly known as the Commonwealth Development Corporation, will commit $100m to a dedicated Africa fund, managed by Citigroup’s private equity arm. Citigroup will match CDC dollar for dollar.

The investment brings CDC’s total commitments to Africa close to $1bn.

Interest in African private equity has been spurred by large profits for backers of Celtel, a pan-African telecoms group that sold in 2005 for $3.4bn.

Citigroup is the biggest name to launch a pan-African fund in a region where private equity is dominated by quasi-governmental development finance institutions, mainly from Europe, and specialist emerging market funds.

Sunil Nair, managing director of CVCI, the Citigroup venture capital business, pointed to the continent’s attractiveness: “[Africa boasts] increasing GDP growth rates and large markets in nine big countries, which have a combined population of 400m and GDP of $600bn.” Political stability has improved and disposable incomes have risen, he added.

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