Private equity in Africa

Africa’s private equity transactions

Private equity transactions in Africa are up 7% with increased deal activity in East Africa and a sharp rise in investment in internet software and IT service providers, driven by Africa’s young population.

Sector focus


Investment activity in consumer discretionary and consumer staples has remained relatively flat over the past three years as a proportion of total activity.

Consumer products have historically been the focus of private equity in Africa, due to the perceived opportunities resulting from the continent’s growing middle-class. Within consumer discretionary, investor interest has moved toward online retail, education services, advertising and publishing; possibly showing a shift from a lower to a higher income group.

The other two traditionally large sectors for investment, Financials and Industrials have also attracted similar levels of investment in the current year when compared to the prior year. The abovementioned sectors have contributed a total of 14% and 11% of the total investment activity, respectively.

As in 2016, Information Technology (IT) is the leading investment sector in Africa in 2017, making up a total of 26% of all African investment activity in the current year, this has increased from 21% in 2016. A significant portion of IT investment is taking place in Nigeria and South Africa’s venture capital sectors. In 2017, there has been a sharp increase in investment in companies such as payment processors, internet software and IT services providers. These investments are positioned to take advantage of the continued increase in internet usage due to growing smartphone penetration.

A significant portion of IT investment is taking place in Nigeria and South Africa’s venture capital sectors.

Africa’s large and increasing youthful population is expected to continue to drive demand for internet software and services due to their affinity for technology.

Industrials remains another popular sector for investment, including the construction, engineering, transport, logistics, equipment and machinery industries. Investment is mostly in the light industrial sector with a focus on import substitution.

The telecommunication sector has experienced a large increase in transaction activity during 2017. Most of the current year’s transactions were focussed on alternative carrier and wireless telecommunication services companies.