Despite widespread decline felt by most economies across the globe, private equity fundraising in Africa managed to reach US$1.3bn in the first half of 2021. This mirrors the gradual stabilization of Africa’s macroeconomic environment which once again put the African private equity (PE) industry on a growth trajectory.
This is according to the 2021 H1 African Private Equity Data Tracker released by the African Private Equity and Venture Capital Association (AVCA). The report revealed that North Africa and West Africa jointly attracted the largest share of PE deals by volume, at 23% each. Multi-region deals attracted 50% of deal value for the first half of the year.
The data tracker provided a provisional look at half year PE activity in Africa, which AVCA CEO, Abi Mustapha-Maduakor, believes is particularly salient in these times of economic uncertainty and focused recovery.
“Private capital remains fundamental towards sustained economic recovery in Africa. Although the first half results still show the lingering effects of the pandemic, we are pleased to see such levels of deal activity which is testament to investors’ resolve and commitment to supporting growth and scaling of businesses in Africa”.AVCA CEO , Abi Mustapha-Maduakor
Africa, on a strong recovery
Growth forecasts were muted at the beginning of 2021 because several African countries were explicably grappling with persistent outbreaks of COVID-19, along with the cascading healthcare crisis and resulting socio-economic restrictions.
After the first half of the year, AVCA Head of Research, Nadia Kouassi Coulibaly, highlighted that Africa’s economic recovery is exceeding expectations.
“Although the IMF predicted sub-Saharan African growth would be moderate to average at around three percent in 2021, the current numbers prove the resilience of African economies, which has been demonstrated during the pandemic”.Nadia Kouassi Coulibaly
The first half of 2021 saw 120 reported deals to the value of US$2.1bn concluded on the continent. Finance, Consumer Discretionary, Industry and Information Technology rose to the top, attracting the greatest investment. Together, these sectors accounted for more than half (72%) of the total deal volume in the first half of 2021, the report revealed.
Firms within the Finance enclaves demonstrated a marginal increase, accounting for 24% of the total deal volume and value reported in H1 2021, up from 20% and 21% recorded in H1 2020 respectively. Within the Industry, the majority of deals in terms of volume and value were in Transportation with 37% and 77% respectively.
Investment activity on the continent
According to Nadia Kouassi Coulibaly, investment activity has also regained momentum. As an example, she pointed to a large deal within the Industry sector which saw US$250mn invested into drone delivery startup, Zipline, by a consortium of investors including Emerging Capital Partners.
AVCA CEO, Abi Mustapha-Maduakor, believes this growth and almost unexpected flourishing of PE activity, solidifies the need for AVCA, as the authoritative voice for private investment in Africa, to provide accurate industry activity data.
“We will continue to provide the vital data to support investors’ decision making as they drive more capital into Africa. The findings in this report tell a positive story about private investment in Africa, and we are proud to play an important role in supporting businesses driving Africa’s long-term economic growth”.Nadia Kouassi Coulibaly
The African Private Equity and Venture Capital Association is the Pan-African industry body which promotes and enables private investment in Africa. With a global and growing member base, AVCA members span private equity and venture capital firms, institutional investors, foundations and endowments, pension funds, international development finance institutions, professional service firms, academia, and other associations.