WHEN Paul Kavuma began approaching private companies in Africa a decade ago to suggest investing in their businesses and improving the way they were run, he was often shown the door. “They were offended, asking if I thought they were broke,” says the founder of Catalyst Principal Partners, an east Africa-focused fund manager. Even when, after hours of explaining the merits of private equity, Mr Kavuma changed business owners’ minds, many still struggled with the idea that within a few years he would sell the stake he had bought. “When we exited, some people thought we had lost confidence in them, rather than that we’d finished what we’d come to do,” he says.

Today, much has changed. African entrepreneurs now boast about being approached by one of the many private-equity investors scouring the continent for opportunities. And it is the financiers, or at least those from beyond Africa, who are having to adapt. Money managers on Wall Street and in the City of London are taking crash courses in Swahili and learning to find Ouagadougou on a map.

A decade ago, African countries were among the beneficiaries of a broader boom in investment in emerging markets worldwide. The financial crisis of 2007-08 put paid to that. Now, many private-equity funds are making Africa a primary target, and record amounts are being raised to invest in businesses there (see chart 1). On January 12th Helios Partners, a London-based firm, said it had raised the first Africa fund worth more than $1 billion. Abraaj, a rival, is expected to follow suit soon.

In some respects it is no surprise that Africa has become such a popular destination for business investment. It certainly needs more capital—an extra $90 billion a year for infrastructure alone, the World Bank reckons. Consumer demand is growing, and industries are being liberalised. A few years ago people would ask “Why the hell are you in Africa?” says Robert van Zwieten of EMPEA, an industry body. Now they ask “Why the hell aren’t you?” Such signs of groupthink are worrying enough in themselves. And there are plenty of other reasons to be sceptical about the current enthusiasm for Africa. Beside the “frontier market” risks private-equity investors will face–bullets, corruption, disease–they often struggle to find deals big enough to interest them. Large funds usually want to buy businesses worth more than $100m, but last year there were only seven such deals, and about half the firms bought were worth less than $10m. Even when a potential deal is identified, family owners are often unwilling to relinquish control and incumbent managers are reluctant to make room for newcomers. Since banks still see Africa as full of risks, it is also difficult for private-equity firms to load a newly acquired business with debt, their usual technique for magnifying their returns. Another of their customary practices—selling a company after about five years of expanding it and improving its performance—is also hard. Local partners are often unwilling to sell, and undeveloped or non-existent local stockmarkets make it hard to unload a stake by means of a listing. The private-equity managers who have done well so far have had to put boots on the ground and exercise more care and patience than is typical in their industry. “There are not many $100m deals for sale, but plenty of $100m opportunities to bolt together,” says Hurley Doddy of ECP, a pan-African investor. Tope Lawani of Helios agrees that investors who complain about a paucity of big deals lack imagination. His fund pieced together Helios Towers, a big pan-African operator of mobile-telecoms masts, from smaller businesses.

One thing successful managers agree on is that investors should not expect to fly in, do a deal and fly out again. The funds that are doing well are those with a strong understanding of local conditions and good business connections in their target countries, such as Catalyst. It looks for midsized companies (worth $5m-20m) that cater to the emerging consumer in east Africa, such as ChemiCotex, a maker of toothpaste and other toiletries it bought in 2011.

Much early investment went into businesses based on fixed assets, such as mobile-phone masts. Now retailers, packagers, restaurants and payment systems are sought after (see chart 2). In 2012 ECP invested in Nairobi Java House, a Kenyan coffee-house chain, and has since helped it to build Planet Yogurt, a group of frozen-yogurt outlets. In 2013 Helios bought 1,600 franchised Shell petrol stations across sub-Saharan Africa, not just to get into the fuel business but also to develop the convenience shops attached to the stations.

Some private-equity money is going into private health clinics and educational institutions such as universities. In much of the rich world, bringing the profit motive into public services is controversial; in Africa, where there is so much unmet need for such services, there is less of a taboo. In general, African entrepreneurs have begun to appreciate how private equity can help their businesses expand and, by improving such things as internal auditing and book-keeping, make them more robust. The rich world’s negative association of private equity with asset-stripping “vultures” does not apply here. Often, those African firms bought by private equity had been relatively well-run by their founders, albeit in a rather seat-of-the-pants fashion. The incoming investors can often boost their performance by, for instance, improving the measurement and analysis of data. They can also provide cash to modernise businesses and make them more efficient. For example, investors in IHS Towers, another big operator of telecoms masts, found that it could cut the $3,000-4,000 average monthly cost of operating masts by almost one-third, by updating their diesel generators or replacing them with solar panels. The sort of business that investors are keenest on is one that is already a champion in its home market and has prospects of becoming a regional or global champion. Carlyle, an American private-equity firm with a $698m pot devoted to Africa, is buying a majority stake in South Africa’s largest tyre retailer, Tiger, and plans to expand it rapidly into neighbouring countries. Since such firms are not easy to find, and since it takes patience to expand them across a continent with so many languages, cultures and legal systems, private equity’s usual practice of selling after about five years may not always be best suited to Africa. Ahmed Heikal of Qalaa Holdings, an Egyptian firm, has concluded that it is not. His firm has abandoned the private-equity model and now follows a strategy of buy, improve and hold. When you finally come across a promising asset, why sell it prematurely, he asks?

Mr Heikal says he is already doing well from his investment in Rift Valley Railways, a rail line from Kenya to Uganda. But he is more interested in its long-term potential to be one of the region’s main routes for transporting oil. His firm’s 15-20-year planning horizon means he is happy to sit and wait for this potential to be realised.

Despite the recent flurry of fund-raising, only about 1% of global private equity goes to Africa. Even so, too much money is pouring into too few funds, chasing the few big deals on offer. Besides, with commodities tumbling, currencies stumbling and political unrest rumbling, Africa’s sunny growth projections have become more tempered. This is no bad thing, say some fund managers: it will scare off fair-weather investors and bring down the prices of overvalued businesses.

Those brave enough to run the risks will need to roll up their sleeves and look for opportunities beyond those firms listed on their Bloomberg terminals. Those who know their Mali from their Malawi, and Mauritania from Mauritius, will be better placed to succeed in the scramble for African businesses than those who do not.