This is according to a new report from the African Private Equity and Venture Capital Association (AVCA)’s 2016 Annual African Private Equity (PE) Data Tracker, which shows a marked increase in the total deal value during 2016.
The report noted that, in total there were 145 private equity deals reported in Africa over the course of the year, amounting to $3.8 billion – versus $2.5 billion in 2015.
In terms of deal size, several large transactions in the energy and utilities sectors in 2016 contributed to the notable rise in total deal value compared with the previous year, the study indicated.
The report also noted that the total value of deals above $250 million was also significantly larger than in 2015.
Private equity investment rising
The analysis also highlighted that African PE funds registered a final close total of $2.3 billion in 2016, which although lower than the previous year, supports an upward trend over the past 5 years.
West Africa continues to be the focus for PE investments by region, holding a 27% share of both number of deals and deal value between 2011 and 2016.
With political stability returning to North Africa, it is expected that there will be a growing appetite for investment in the region, along with under-served markets such as Central Africa.
Increasing investor interest
Commenting on the report, CEO at African Capital Alliance, Cyril Odu, noted: “As the effects of rapid urbanisation, a resilient and adapting middle class and accelerating consumption patterns begin to take shape, increasing investor interest will continue to boost deal flow and intensify capital injections.
“As the 2016 Annual PE Data Tracker shows, private investment in Africa is developing at an exciting rate.”
Director and head of research at AVCA, Enitan Obasanjo-Adeleye, said: “Africa’s PE potential is coming to fruition as illustrated here through another year of strong results.
Obasanjo-Adeleye added: “This is no flash in the pan; we now have seen strong and sustained PE investment in Africa over the past 10 years and AVCA will continue to play its role as a major enabler and champion for PE investment in Africa as the region becomes more widely recognised as the world’s most exciting and attractive frontier investment destination.”
The African Private Equity and Venture Capital Association is a pan-African industry body, which promotes and enables private investment in Africa.