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Private Equity

Fundraising activity on the continent remained relatively stable, most regions showed an increase in cost of equity, transaction activity is up since 2017, the upward trend in multiples continues and Information Technology and Consumer Discretionary remain the two sectors with the highest investment activity.

Market Conditions

In this section, the market conditions that influence private equity pricing in Africa are covered.

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Cost of equity

The overarching driving factor for the increase in cost of equity for the different African regions is the potential shift in investor sentiment, away from emerging and frontier markets to safer, developed markets.

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Private equity fundraising over time

Africa’s PE fundraising activity remains stable.

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Africa’s private equity

The continent’s growing population and middle class drives sector investment activity and in 2018, East Africa surpasses South Africa as the region with the highest level of PE transactions.

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Listed EV/EBITDA multiples

African countries experienced a decline in EV/EBITDA multiples reflecting the challenging investment and growth outlook as the commodity cycle starts to turn again.

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Private equity multiples in Africa

There was a convergence of private equity and listed equity multiples at around 8x EV/EBITDA in 2018.

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