Despite the global economic downturn, private equity fundraising in Africa has already reached US$1.3 billion in the first half of 2021, when final and interim closing is included. The African private equity (PE) market, which tries to prove itself and is once again on a development track, mirrors the progressive stabilisation of Africa’s macroeconomic climate.
According to the African Private Equity and Venture Capital Association’s 2021 H1 African Private Equity Data Tracker, this is the case (AVCA). According to the research, North Africa and West Africa garnered the greatest PE agreements by volume, accounting for 23% of all deals. For the first half of the year, multi-region deals accounted for half of the deal value.
The GPS tracker provides a preliminary glimpse into half-year African PE activity, which AVCA CEO Abi Mustapha-Maduakor feels is especially important in these times of economic instability and targeted recovery. “Private capital remains critical to Africa’s long-term economic revival.” Even though the pandemic’s effects were still visible in the first half of the year, we are encouraged to see such high levels of transaction activity, which demonstrates investors’ tenacity and commitment to supporting the growth and scaling of firms in Africa.”
Several African countries were naturally battling with repeated outbreaks of COVID-19 and the cascading healthcare crises and associated socio-economic limitations, which kept growth expectations limited at the start of 2021.
Nadia Kouassi Coulibaly, the AVCA’s Head of Research, believes Africa’s economic recovery outperforms forecasts. “Although the IMF expected that sub-Saharan African growth would be moderate, averaging approximately 3% in 2021, the present figures illustrate the African economies’ resilience, as was demonstrated during the pandemic.”
On the continent, 120 reported acquisitions worth US$2.1 billion were closed in the first half of 2021. Financials, Consumer Discretionary, Industrials, and Information Technology, ranked first and second, respectively, drawing the most investment and accounting for more than half (72%) of total transaction volume in the first half of 2021.
Financials saw a slight increase, accounting for 24 per cent of overall deal volume and value reported in 2021 H1 compared to 20 per cent and 21 per cent in 2020 H1. Transportation accounted for the bulk of deals in terms of volume and value, with 37 per cent and 77 per cent, respectively, among Industrials.
Investment activity has also picked up, according to Nadia Kouassi Coulibaly. She cites a big deal in the Industrials sector, in which a syndicate of investors, including Emerging Capital Partners, spent US$250 million in drone delivery startup Zipline.
This expansion and almost unexpected flowering of PE activity, according to AVCA CEO Abi Mustapha-Maduakor, underlines the necessity for AVCA, as the authoritative voice for private investment in Africa, to offer accurate industry activity data.
“As investors pour more money into Africa, we will continue to provide critical data to aid their decision-making.” The findings in this report paint a good picture of private investment in Africa, and we are happy to assist enterprises that are driving the continent’s long-term economic progress,” she says.
Ken is a Quantitative Trader with experience in investments, quantitative finance, financial modelling and algorithmic trading in Global Investable Markets (GIM). He enjoys using Bayesian Statistics, Time Series and Machine Learning in developing Robust consistent Alphas in Equities Market, FX, ETPs and Derivatives instruments. He enjoys deep dives in understanding High Frequency Trading infrastructures and improving how the African financial markets work. He holds a Bachelor's in Actuarial Science from Strathmore Institute of Mathematical Sciences : An Executive Program in Algorithmic Trading (EPAT) certificate in Algo Trading from QuantInsti : A current MSc student in Financial Engineering at World Quant University.