London, UK, 2 February 2016: 2015 proved to be another positive year for private equity in Africa, a new report from The African Private Equity and Venture Capital Association (AVCA) shows. AVCA’s Annual African Private Equity (PE) Data Tracker reveals that deal activity in Africa continues to be strong even in an increasingly volatile global economic environment.
The total value of PE funds on the continent rose from US$1.9bn in 2014 to US$4.3bn in 2015, based on final close. Fundraising in Africa continues its historical upward trend, with a total of US$16.2bn raised since 2010 demonstrating increasing global investor appetite for PE in Africa.
2015 saw fewer deals above US$250mn compared with 2014, resulting in a drop in overall total deal value from US$8.1bn to US$2.5bn. Nevertheless, deals below US$250mn in size remained relatively stable, with the total annual deal value of these deals increasing slightly in 2015. This is in spite of on-going challenges African economies faced including currency devaluation, slowdown in China and collapsing oil and commodity prices.
West Africa continues to lead in share of PE investments by region with a 25% share of deals between 2010 and 2015, providing further proof of the widening of investment activity outside South Africa. Sub-sectors that saw a notable increase in PE deal values in 2015 relative to 2014 (albeit from a low base) were Commercial & Professional Services (Industrials), Health Care Equipment & Services (Health Care) and Software & Services (Information Technology).
The outlook for 2016 remains very promising. PE investment is likely to continue to be geared towards the FMCG sectors, with infrastructure, real estate and energy also attracting a substantial interest from investors. Sub-Saharan Africa (excluding South Africa) remains the focus for investors.
Dorothy Kelso, Director of Research at the African Private Equity and Venture Capital Association said, “As PE in Africa matures, the report shows a resilient industry experiencing continued growth even as wider concerns about emerging markets impact the investment landscape. PE firms in Africa continue to inject capital in a variety of sectors from industrials to financial services mobilising local economies and creating jobs. Looking forward, Africa’s fundamentals including rapid urbanisation, a rising middle class population and more business-friendly policies from African governments will continue to provide opportunities of interest to PE investors.”
Michelle Kathryn Essomé, Chief Executive of the African Private Equity and Venture Capital Association, adds: “Our annual PE tracker shows that investors remain keen to explore opportunities in Africa through PE funds, providing further evidence of Africa’s untapped potential as an investment destination.”
For more information, please visit the AVCA website.
The full report will be made available exclusively to the AVCA membership.
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