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Africa records one of its strongest-ever halves for private capital investment

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Africa has scored one of its strongest six months of private equity and venture capital investment ever, with $4.7bn of new capital flowing into companies in the continent.

More than 330 PE and VC deals were done in the first half of 2022, research from industry body AVCA shows.

Big drivers of the investment wave were the substantial amount of fresh capital raised by fund managers in 2021, an increasing interest in Africa’s venture ecosystem and overall larger ticket sizes.

AVCA said, “Unsurprisingly, given its enormous potential, the continent’s financial services industry has continued to attract investors from all over the world, with fintech companies, in particular, comprising 89% of the total number of deals within financials.

“Financials was the most active sector in 2022 H1 by volume, attracting 103 private capital investments at almost 2x levels recorded in 2021 H1, followed by the industrials sector which also emerged as the second most active sector by value.

“From a regional perspective, West Africa continues to dominate private capital deals by volume (34%).

“Senegal now holds third place, overtaking Côte d’Ivoire, to follow Nigeria and Ghana as having the largest shares of deal volume in the region.”

The report showed that private capital exit activity also experienced notable growth in the first half of 2022.

Fund managers achieved 22 full exits, representing a 29% increase compared to the corresponding period in 2021. This was driven mainly by growth in trade and secondary sales.

Fundraising in Africa slowed down in the first half of 2022, however, reaching $700m in final closes, a 20% drop compared to the corresponding period last year.

AVCA put that decline down to a mirroring of global trends, the result of a more challenging and competitive fundraising environment for fund managers globally and fears of a global economic downturn.

Nadia Kouassi Coulibaly, head of research at AVCA, said, “Record-breaking H1 performance is a powerful demonstration of the continued growth of the African private capital and venture capital ecosystem, despite significant global headwinds.

“The industry is on track for stellar performance in H2 and we are working closely with members to provide the insight and support they need to grow their portfolios.”

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