The African Private Equity and Venture Capital Association (AVCA) has released of its 2020 Annual African Private Equity Data Tracker report, which provides data and analysis on private equity (PE) fundraising, deals and exits in Africa in 2020, as well as an overview of PE activity on the continent from 2015 to 2020.
It also incorporates regional spotlights and case studies covering activity in Southern, West, North and East Africa.
The new report highlights the African PE sector’s resilience during a time of global uncertainty. As a result of the economic fallout precipitated by the Covid-19 crisis, the value of PE deals marginally declined to USD3.3 billion in 2020, from USD3.8 billion in 2019. However, the number of deals within the same period rose from 230 in 2019 to 255 in 2020. Although the PE fundraising dropped to USD1.2 billion in final closes in 2020 from USD3.9 billion in 2019, the Association’s overview of industry activity and capital-raised indicates that investor appetite in African PE has remained robust with USD18.1 billion of fundraising between 2015-2020.
The report shows that 1257 reported deals worth a total of USD21.7 billion occurred between 2015 and 2020. In terms of sectors, Financials, Information Technology and Consumer Discretionary reported the most activity in 2020 attracting 47 per cent of deals by volume. Deals in technology-enabled companies represented more than half (55 per cent) of the investments recorded in Africa in 2020. These findings are testament to the disruptive and rapidly evolving industries and services that are accelerating Africa’s digital transformation – mobilising both local and international investment as a result.
The report also provides key learnings from doing business in Southern, West, North and East Africa, detailing the median deal size, in addition to the number and value of reported PE transactions, in each region and nuanced insight into the political, economic and regulatory environments for key markets with illuminating case studies for each region.
Over the 2015 to 2020 period, Southern Africa attracted the most significant number of deals – 364, totalling up to USD4.4 billion in value. West Africa came second with 313 deals but attracted the highest value of deals at USD5.4 billion. North and East Africa followed with 220 deals at USD3.6 billion and 237 at USD2.8 billion respectively.
In total, 270 African PE exits were reported between the 2015-2020 cycle. The number of PE exits decreased to 33 in 2020, down from 44 in 2019, reflecting the global economic downturn spurred by the global healthcare crisis. Mirroring trends identified by AVCA in 2019, exits to Trade Buyers were the most common exit route in 2020 (46 per cent), followed by exits to PE and other financial buyers, representing 33 per cent of the total number of exits last year.
Notable exits announced in 2020 include African Infrastructure Investment Managers’ exit from Cookhouse Wind Farm in South Africa; Actis’ exit from GHL Bank, a full-scale commercial bank in Ghana; Helios Investment Partners’ exit from Africatel (Unitel), a sub-Saharan African telecommunications services provider; and AfricInvest’s exit from Esprit, the leading private university in Tunisia.
Africa’s PE industry continues to stand by its fundamental principles: providing capital to maximise companies’ growth and progress Africa’s economies, especially as the continent recovers from the impact of the COVID-19 pandemic.
Abi Mustapha-Maduakor, Chief Executive Officer at AVCA, says: “GPs and investors continue to find new ways to succeed in a challenging fundraising environment. As the report finds, geographic and sectoral expansion creates new opportunities to align impact with yields. Digital innovation in healthtech, fintech, edtech, cleantech and agritech are engineering Africa’s economic transformation. Against these evolving trends, Africa’s PE industry remains robust, with 255 deals reported on the continent throughout 2020, totalling USD3.3 billion in value. Overall, we anticipate an increase in PE and VC firms actively investing across the continent throughout 2021.”