Africa fund raising climbs while deal value drops

Fundraising for the continent soared to $4.3 billion last year, up from $1.9 billion the year before, according to AVCA’s PE Data Tracker.

The total value of private equity funds raised in Africa jumped to $4.3 billion in 2015, up from $1.9 billion the year before, despite a drop in private equity deal value.

Fundraising in Africa “continues its historical upward trend” with a total of $16.2 billion raised for the continent since 2010, the African Private Equity and Venture Capital Association (AVCA) said in a statement. Half of these funds were regional, a third encompassed Sub-Sahara and the remainder were pan-African, according to AVCA’s annual PE Data Tracker report.

Funds that reached final close in 2015 included Abraaj Africa Fund III on $990 million, Helios Investors III on $1.1 billion, and African Development Partners II in $725 million.

The value of private equity deals in Africa dropped last year to $2.5 billion from a five-year high of $8.1 billion in 2014 due to a decline in deals above $250 million, according to AVCA data. In 2013, deal value stood at $4.2 billion, and at $2.2 billion in 2012. Funds that reached final close in 2013 totalled $3.5 billion, while $1.9 billion was raised in 2012.

Transactions included Cote d’Ivoire-based PCM Capital Partners’ investment in Azalaï Hotels Group, 8 Miles’ investment in West Africa’s Orient Bank Group and Mauritius-based Adenia Partners’ investment in Cresta Paints.

Adenia is currently raising its fourth fund targeting €200 million to invest in control stakes of €5-20 million in companies in Mauritius, Madagascar, Cote D’Ivoire and Ghana, as reported by Private Equity International.

Deal volume for transactions below $250 million remained stable in 2015 “in spite of on-going challenges African economies faced including currency devaluation, slowdown in China and collapsing oil and commodity prices,” AVCA said.

Market segments where deal value increased last year included commercial and professional services, healthcare and equipment services and software services, AVCA said. In 2016, fast moving consumer goods, infrastructure, real estate and energy are expected to be the focus of investment.

“As PE in Africa matures, the report shows a resilient industry experiencing continued growth even as wider concerns about emerging markets impact the investment landscape,” AVCA director of research Dorothy Kelso said in a statement. “PE firms in Africa continue to inject capital in a variety of sectors from industrials to financial services mobilising local economies and creating jobs.”

West Africa accounted for 25 percent of private equity investments between 2010 and 2015, the biggest share by region. Since 2010 there have been 823 completed transactions across Africa with a total deal value of more than $21.6 billion, AVCA said.