Growth in African PE fundraising highlights investors’ bullish outlook for continent

14 Mar 2019

AVCA releases annual study presenting Africa’s Private Equity (PE) fundraising, deal and exit activity for 2018

Thursday 14th March 2019, London
: The African Private Equity and Venture Capital Association (AVCA) today released its authoritative annual report analysing activity in the PE sector, incorporating regional spotlights covering Southern, West, North and East Africa, alongside exit data for the first time.

The report reveals that African PE has remained robust with the total value of fundraising increasing to US$2.7bn in 2018 from US$2.4bn in 2017, indicating investors’ ongoing confidence in African PE. The total value of African PE fundraising between 2013 and 2018 was US$17.8bn and the median size of final closed funds over the same period was US$123mn.

The data shows that 1022 reported deals worth a total of US$25.7bn took place from 2013 to 2018. While the value of PE deals dropped marginally in 2018 to US$3.5bn from US$3.9bn in 2017, the number of PE deals encouragingly reached a six-year peak of 186 in 2018. In terms of sectors, Information Technology, Consumer Discretionary and Consumer Staples accounted for almost half the total number of PE deals last year, reflecting the attractiveness of businesses that capitalise on Africa’s growing consumer market. Notably, Information Technology’s share of deal volume has significantly grown in recent years, nearly doubling to 19% in 2018 from only 10% two years prior. Meanwhile, Communication Services and Utilities were the largest sectors by value in 2018.

In total 273 exits were reported between 2013 and 2018. There was a slight decline in exit activity between 2017 and 2018, with the number of exits dropping from a high of 52 to 46, with this being attributed to uncertainty in South Africa, which saw its share of exit volume decline from an average of 42% between 2013 and 2017 to 20% in 2018. Exits to trade buyers accounted for the largest share of exits at 39% in 2018, up from 25% in 2017. Meanwhile, the growing trend of exits to PE & other financial buyers, which emerged in 2016, persisted in 2018, accounting for 37% of exits.

The report also sheds light on PE activity in Southern, West, North and East Africa, detailing the number and value of reported PE deals, as well as the median deal size, in each region, as well as providing a breakdown by country. It also provides political, economic and regulatory contexts for key markets, as well as two case studies per region.

Over the 2013 to 2018 period, Southern Africa attracted the largest number of PE deals at 294, while West Africa had the largest share of deals by value at US$10.8bn. Finally, North Africa had the largest median deal size at US$8mn, while East, West and Southern Africa each had a median deal size of US$6mn over the same period.

Enitan Obasanjo-Adeleye, Director and Head of Research at AVCA, added: “African PE continues to present exciting developments and we are encouraged by the increase in fundraising in 2018 relative to the previous year. The data from the annual Data Tracker shows that investors remain bullish about Africa’s prospects and we are proud to continue educating and informing local and international investors about opportunities on the continent.”

For more information, and to download the report, please click here.


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