African private capital falls to $1.6bn as mega deals shrink — Report

Africa’s private capital market started 2025 on a quieter note, as the total disclosed deal value dropped significantly to $1.6 billion in the first quarter of the year, according to a new report.

Data from Stears’s latest Private Capital in Africa Activity Report disclosed that this is a stark contrast to the $4.7 billion recorded in Q4 2024.

“The drop in transaction value primarily reflects a shift in deal size composition, with investors moving away from mega transactions (valued above $75 million) towards more moderately sized large deals (ranging from $25 million to $75 million),” it said.

Despite the value dip, deal activity remained strong, with 105 transactions tracked during the quarter broadly in line with the 106 transactions in the previous quarter and markedly higher than the 88 recorded in Q1 2024.

“Country rankings in Q1 2025 mirrored the regional order (Southern–East-West), with South Africa leading ahead of Kenya and Nigeria. South Africa also dominated single-country transactions, which alone accounted for 17 percent of all African deals during the quarter,” it said.

During the first three months of the year, investors were opting for equity financing as it remained the dominant capital structure in Africa, featuring in 79 percent of all transactions in Q1 2025, an increase from 73 percent in Q4 2024, underscoring investors’ ongoing preference for equity-based structures during the period.

However, the report said that while equity remained the primary financing mechanism, debt financing gained significant traction, particularly in the energy and consumer goods sectors.

“Consumer Goods transactions, in particular, saw a sharp shift in financing structure. While 90 percent of deals in the sector were equity-based in Q4 2024, this figure plunged to 69 percent in Q1 2025.

“Approximately 35 percent of transactions in this segment included a debt component, making it responsible for 32 percent of all debt deals across the continent. A key example is Royal Garment Group’s $15 million senior debt facility from the International Finance Corporation (IFC), which forms part of a broader $20 million debt and equity package.

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“Energy retained its reputation as the most debt-reliant sector, with an equal split between debt and equity financing. The sector accounted for 36 percent of all debt transactions triple its share of equity deals during the quarter,” the report said.

Sectoral shifts shake up the leaderboard

African private capital activity experienced significant sectoral shifts in Q1 2025, it said the financial services sector led transaction volumes, accounting for 30 percent of all transactions.

This was followed by consumer goods & services (25 percent) and technology (19 percent), the report said.

Compared to Q4 2024, the ranking of sectors changed notably. Industrials, which was the leading sector last quarter (20 percent), fell sharply to sixth place (7 percent). Conversely, financial services moved from fifth place (15 percent) in Q4 2024 to the top position in Q1 2025 (30 percent).

On the other hand, consumer goods & services maintained its position in second place, while Technology and Agriculture remained in the top five, though their rankings shifted slightly.

“In Q1 2025, the gap between the first-ranked financial services and second-ranked consumer goods alone was five percentage points. Moreover, the three leading sectors in Q1 2025 accounted for a substantial 73 percent of total transactions, compared to only 55 percent for the top three sectors in Q4 2024,” it said.