Africa’s private capital rises to $10bn on equity financing

The African private capital market experienced significant growth in 2024, with disclosed deal values reaching $10.1 billion, an increase from the $6.7 billion recorded in 2023, according to a report by Stears.

The 2024 Private Capital in Africa Activity Report which tracked African private market transactions for Q4 2024 and FY 2024 disclosed that this increase came despite a lower disclosure rate of 46 percent compared to 71 percent in the previous year, highlighting the impact of mega transactions that drove the surge in deal values.

It said Q4 alone accounted for $4.7 billion in disclosed transactions.

“Equity financing remained the dominant form of funding in African private capital transactions throughout 2024. In Q4, 73 percent of transactions involved equity financing, while 31 percent included a debt component.

“In 2024, 81 percent of deals incorporated equity financing compared to 26 percent involving debt. While equity remained the preferred financing method across sectors, debt financing was more common in agriculture and energy transactions. Notably, mezzanine and hybrid financing structures gained traction, reflecting investor confidence in these alternatives,” the report said.

“The FY2024 report highlights Africa’s resilience and growing importance in global private capital flows,” said Michael Famoroti, head of research at Stears.

“Our analysis underscores the critical role of equity financing and the continued dominance of key economies like South Africa, Kenya, and Nigeria in shaping investment trends,” Famoroti added.

The report noted that South Africa, Kenya, and Nigeria led private capital activity, accounting for 25 percent, 25 percent, and 24 percent of total transactions, respectively, while Egypt and Ghana followed with 14 percent and 13 percent.

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“Egypt’s strong showing was marked by a high proportion of single-country transactions (62 percent), just behind South Africa (63 percent). Morocco also demonstrated localised investment trends, with 52 percent of its transactions occurring within its borders, reinforcing the broader pattern of North African markets focusing on regional investments,” Stears disclosed.

In terms of sector, financial services emerged as the top sector in 2024, comprising 22 percent of all transactions, followed closely by consumer goods & services (20 percent), technology (17 percent), and industrials (15 percent).

It said the energy and agriculture sectors each recorded 45 transactions, making up 13 percent of the total market activity. Within financial services, payments infrastructure stood out as the most active sub-sector, accounting for 23 transactions, or 29 percent of financial services deals.

However, among the major deals in 2024 was Chappal Energies’ $1.2 billion acquisition of Equinor Nigeria Energy Company Limited, which included a $710 million purchase price and additional contingent payments.

Other transactions included Indorama Fertilisers’ $1.25 billion debt financing led by the International Finance Corporation (IFC) and Eni’s $783 million sale of Agip Oil to Nigeria’s Oando. Comparatively, 2023’s largest transactions were BUA Cement’s $500 million debt facility from IFC and MNT-Halan’s $400 million capital raise.

In 2024, Stears disclosed that the most active private investors in Africa included a mix of Development Finance Institutions (DFIs), venture capital (VC) firms, and small to mid-sized impact funds. DFIs such as IFC, FMO, and DEG played a significant role, while VC firms like Norrsken22 and Launch Africa, alongside impact funds such as Sahel, Incofin, and Acumen, maintained significant transaction volumes.

“Banks and DFIs dominated the transaction value ranking. Afreximbank and Standard Bank alone accounted for roughly one-third of the disclosed transaction value in 2024. DFIs collectively made an even greater impact, with British International Investment (BII), FMO, the United States International Development Finance Corporation (DFC), and the German DEG contributing 58 percent of the year’s disclosed transaction value.”

Looking specifically at private equity, it said, “The continent’s largest private equity firms made their mark in 2024. Mergence Investment Managers and Development Partners International (DPI) ranked among the top 15 investors. Along with Helios Investment Partners, AfricInvest, and Verod Capital Management, these five were involved in transactions totalling over $1 billion, representing 11 percent of disclosed transaction value.”