Steady PE deal flow highlights continued confidence in African private equity

Private equity fundraising in Africa, including final and interim closes, totalled USD2.1 billion in the first six months of 2018, highlighting the continuing attractiveness of Africa’s investment landscape, according to a new report by The African Private Equity and Venture Capital Association (AVCA).

Some 60 per cent of that amount was allocated to infrastructure-related funds.
The total value of reported PE deals in the first half of 2018 was USD0.9 billion, with the Consumer Discretionary, Financials and Consumer Staples sectors accounting for the highest volume of activity over the period. Specifically, the Financials sectors’ deal volume share increased to 16 per cent in H1 2018, from 10 per cent in H1 2017. These figures illustrate the significant potential of Africa’s growing middle class and their consumption patterns.
The Financials, Industrials and Utilities sectors accounted for the largest shares of overall deal value, representing 75 per cent of the total. Notably, the Utilities sector increased its share of deal value to 37 per cent in H1 2018 from only 3 per cent in H1 2017.
West Africa continues to be a hotspot for PE activity, along with multi-region deals, with both attracting 46 per cent of the total number of PE investments. In terms of value, multi-region deals accounted for the greatest share.
The outlook for the rest of 2018 and beyond is positive, with strong indications of sustained confidence in the African PE industry, as evidenced by the stable levels of PE activity.
'Tokunboh Ishmael, Chair of the AVCA Board and Co-Founder and Managing Director at Alitheia Capital, says: “Africa’s private equity industry continues to grow, highlighting investors’ ongoing commitment to the continent. Consumer-focused deals have dominated investments for the first half of 2018, a testament to the resilience of Africa’s consumer story.”
Enitan Obasanjo-Adeleye, Director and Head of Research at AVCA, adds: “As the H1 2018 Data Tracker illustrates, private investment in Africa is developing at an exciting pace. We have seen sustained PE investment in Africa over the last decade and we expect this to grow even further as investors increasingly recognise Africa as one of the most attractive destinations for investment. AVCA will continue to use its voice to champion and enable private investment across the continent.”