Regional breakdown: North Africa

LPs favour Egypt as the country continues to achieve GDP growth through the covid-19 crisis, with healthcare a focus across the region.

Accounting for 17 percent of the continent’s private equity dealflow by volume and value in 2015-20, North Africa remains a popular choice for investors. Alongside West Africa, the region was selected as the most attractive location for investment over the next three years by LPs in the African Private Equity and Venture Capital Association’s 2021 African Private Equity Industry Survey, as well as the top choice among non-African investors.

Egypt remains the region’s jewel in the crown when it comes to PE deals, accounting for 68 percent of North African deal volume last year, according to AVCA, and overtaking Nigeria to become the second-most attractive country for investment among LPs.

Alexia Alexandropoulou, research manager at AVCA, says: “Egypt continues to be a rising star for both private equity and venture capital investment in North Africa, maintaining its reputation as an attractive regional investment destination.” The country achieved real GDP growth of 3.6 percent last year despite the pandemic, and the International Monetary Fund expects further growth of 2.8 percent this year and 5.2 percent in 2022.

Investors have maintained their focus on the healthcare sector through covid-19, and in North Africa private equity deal activity has been concentrated in healthcare providers, says Sabrina Katz, manager of research at the Global Private Capital Association.

“Most notably, IFC Asset Management Company and a slew of development finance institutions invested $360 million in Humania, a UAE-based platform to develop clinics and hospitals in North Africa,” she says. “Similarly, a Mediterrania-led consortium acquired MetaMed from Gulf Capital, and Vantage Capital invested in Cliniques Internationales du Maroc Group.”

Countries in the region have also been looking at ways to create more favourable conditions for start-ups across a range of sectors. For example, Algeria has introduced tax incentives and formed a committee for labelling start-ups, among other measures, to provide a framework to support innovation. Tunisia, which introduced a Startup Act in 2018, has launched a fund of funds through Startup Act operator Smart Capital to aid businesses in each stage of their development.

Alexandropoulou says: “North African governments remained committed to creating supportive environments for Afro-entrepreneurship to thrive and remain competitive in 2020, setting a strong example for the rest of the continent.”