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Zoning in on African private equity

Deal volume picked up last year, as tech innovation and a burgeoning VC scene made their mark on Africa’s investment landscape. We outline the trends shaping private equity activity on the continent.

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Share of Africa PE deals, 2014-19

While total deal value in Africa declined in 2019, deal volumes continued to climb. Going forward, Africa, like elsewhere in the world, will face economic headwinds triggered by the covid-19 pandemic.

Nevertheless, recent developments such as the ratification of the African Continental Free Trade Area, which is designed to create a single continental market for goods and services, are expected to bolster private equity activity. As AVCA research manager Alexia Alexandropoulou notes, AfCFTA “will have the twin effects of positioning Africa as a viable investment market as well as fuelling investor interest and confidence in the continent”.

Proportion of African exits by region, 2014-19*

Last year’s exit volumes remained broadly in line with 2018, with a slight dip from 45 to 43 reported exits. IPOs remained the least popular exit strategy, accounting for 2 percent of recorded PE exits last year. However, exits to trade buyers were on the up, making up 44 percent of 2019’s exit routes, compared with 36 percent in 2018.

*Figures have been rounded