Investors favour equity over debt as private investment rises to $2.27bn

Private capital investment across Africa in the third quarter of 2024 recorded a combined value $2.27 billion of which equity investment dominated debt, according to a report by Stears.

The ‘Stears Private Capital in Africa Report for Q3 2024’ disclosed that out of the 73 recorded private market deals, equity was the most preferred choice.

It said, “75 percent of the transactions included an equity component, with 71 percent being strictly equity-based, compared to 19 percent utilising debt.”

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Investopedia, a financial research platform, defines equity private capital as the ownership or interest in a company that is not publicly traded on a stock exchange. These investments typically come in the form of private equity (PE), venture capital (VC), or other direct ownership stakes in companies.

The report shows that consumer goods and technology were the sectors that led equity investments by 86 percent and 90 percent, respectively.

“An exception in the Technology sector was Terrapay’s $95 million loan package aimed at expanding its African operations,” it said.

The African-focused data platform highlighted that the financing, sourced from OP Finnfund Global Impact Fund I, Belgian BIO ($30 million), International Finance Corporation ($30 million), impact investor ILX ($15 million), and the UK’s BII, reflects the growing interest in supporting digital infrastructure across the continent.

However, for debt financing, agriculture and energy top the sectors with the most investment, which together accounted for 79 percent of recorded debt deals—more than double their contribution to all private capital transactions (33 percent).

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A further breakdown of the report revealed that equity-focused deals were particularly dominant in North and Southern Africa.

“North Africa led with the highest share of deals featuring an equity component at 86 percent, while Southern Africa recorded the largest proportion of equity-only transactions at 79 percent,” it said.