Private equity in Africa

Market conditions

In this section the market conditions that influence private equity pricing in African markets are discussed. First, we cover the theoretical cost of equity, which reflects the risk and reward profile of the markets. Secondly the supply and demand of capital in the private market is reviewed by examining fundraising for private equity funds. Lastly, we discuss the pricing of the listed market. Improved market conditions are evident in Africa’s reduced cost of equity, which bodes well for investors into Africa.

Listed EV/EBITDA multiples

When looking at the levels of enterprise value to EBITDA ratio, the structural differences between the different regions of Africa once again become apparent. There is a stark contrast between listed EV/EBITDA multiples on the North African exchanges and the sub-Saharan African exchanges.

Africa’s listed multiples recover Listed EV/EBITDA multiples over time Download the graph PDF (30KB)


The North African exchanges are significantly higher than the rest of the continent, having diverged from the remainder of the continent over the past two years, and moved in parallel to the Rest of the World*. As identified in previous sections of this report, these countries have significant structural differences when compared to much of sub-Saharan Africa, including their strong links to Europe. The Maghreb region is set to have a strong 2018, following positive investment reforms taking place in several countries. Morocco and Egypt have continued to position themselves as high-quality African investment destinations. The global uptick in commodity prices will likely add further stimulus to the Egyptian economy.

In contrast, the sub-Saharan Africa exchanges have diverged from the rest of the world since the downturn in global commodity prices. However, slow signs of recovery in the past year suggest that a price correction is imminent and may have already begun.

African countries experienced modest growth in EV/EBITDA multiples; although most countries ended 2017 with multiples below 8x, not materially different from 2016. The slight upward trend in African listed multiples reflects a renewed interest in African investment opportunities resulting from stronger global growth prospects and higher commodity prices.

Nigeria’s recovery lagging Listed EV/EBITDA multiples over time Download the graph PDF (31KB)


EV/EBITDA multiples in Kenya increased the most, at 42% over the year with the average EV/EBITDA multiple moving from 5.8x in December 2016 to 8.3x in December 2017. Multiples in Ghana increased by 11% while the multiple for Francophone West decreased by 44% over the period to a more sustainable level.

In Nigeria, multiples decreased by 14%, from 6.1x in December 2016 to 5.3x in December 2017.

This multiple has been trending upwards in 2018 so far, as the Nigerian economy has started to recover as previously noted, which is beginning to reflect in country’s listed multiples.

In 2017, multiples in South Africa were flat, while multiples in Southern Africa decreased by 5%. Multiples in the Maghreb region increased by 7% over the period.