Africa private equity deal, fundraising surge in 2014

The outlook for private equity in Africa remains exceptionally positive for 2015, a new report by the African Private Equity and Venture Capital Association (AVCA) reveals.

This is in spite of ongoing challenges concerning subdued growth prospects in Europe and China, and any short-term uncertainties on the continent itself.

The report, released February 27, 2015, shows growing support for, and increased investor confidence in African private equity over the next few years.

The African Private Equity data tracker shows deal activity on the continent remains strong with $8.1 billion worth of deals completed in 2014 – the second highest on record.

This was due, in part, to a number of significant deals announced in 2014, including the $3.1 billion worth of funding secured by IHS Towers, the mobile infrastructure provider, from existing and new investors in 2014.

Since 2007, 983 transactions have been completed with a total value of $34.5 billion reflecting the improving environment for private equity in Africa. Fundraising in Africa also shows no signs of slowing down, with over $4.1 billion raised in 2014 and a total of $22 billion raised since 2007, demonstrating increasing global investor appetite for private equity funds on the continent.

The tracker reveals a shift in investment activity, with West Africa now receiving the highest share of PE investments by number, providing evidence of a gradual widening of investment activity outside South Africa.

West Africa’s share of private equity transactions on the continent grew from 22 percent between 2007- 2010 to 25 percent from 2011-2014, while South Africa’s share dropped from 28 percent to 24 percent in the same period.

The main sectors attracting African private equity investments continue to be Fast Moving Consumer Goods (FMCG), Financials and Industrials, which have accounted for around 60 percent of private equity transactions by volume from 2007-2014.

Looking ahead into 2015, the outlook remains very promising. PE investment is likely to continue to be geared towards the FMCG sectors, as well as infrastructure, real estate and energy, with sub-Saharan

Africa (excluding South Africa) remaining the focus for investors.

Michelle Kathryn Essomé, chief executive, African Private Equity and Venture Capital Association, said: “This research shows that even with global systemic challenges affecting the investment environment, investors are still keen to explore opportunities in Africa.

“Part of AVCA’s role as an association is to support the private capital ecosystem, by informing investors and to encourage enabling business environments so private equity on the continent can thrive. This report shows that Africa is well placed to successfully ride the wave of short-term global and local uncertainties and investors can remain confident of the medium-to-long term growth and opportunities that are available.”

Dorothy Kelso, director of research, African Private Equity and Venture Capital Association, added: ”The research provides further evidence of a maturing private equity market in Africa. Supported by local and foreign institutional investors, African private equity firms are increasingly able to mobilise much-needed capital to invest in a diverse range of companies, countries and sectors across the vast African continent.”

The African Private Equity and Venture Capital Association is the pan-African industry body that promotes and enables private investment in Africa.