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Private equity

Pricing in Africa

Many of the drivers of price changes are unobservable, so it is often difficult to interpret changes over time. However, the same factors that influence any investment’s price also influence private equity market prices, as noted in this research's introduction.

Historically, the range of EV/EBITDA multiples across sectors and company sizes are relatively small. Information technology (IT) and consumer discretionary remain the two sectors with the highest investment activity.

The highest EV/EBITDA multiples throughout the Africa Ex. SA region is historically seen in the consumer discretionary (7.8x) and consumer staples (7.6x) sectors, which promise high growth due to African demographics. Consumer discretionary is one of the sectors with the highest EV/EBITDA multiple in South Africa. However, for the period June 2018 to June 2020, information technology (8.1x) surpassed consumer discretionary (7.7x) for being the sector with the highest EV/EBITDA multiple.

The median EV/EBITDA multiple for Industrials of 7.9x for Africa ex. SA and 6.0x for South Africa for the period June 2018 – June 2020 has increased on average by 14% compared to the June 2015 to June 2017 period, driven by an overall increase of 63% in transaction activity over the same periods.

Although an increase in transaction activity has been observed in the communications sector, the median EV/EBITDA multiple has remained relatively flat throughout Africa, averaging 5.9x. Most deals in this sector were focused on alternative carrier and wireless telecommunication services companies.

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Many of the drivers of price changes are unobservable, so it is often difficult to interpret changes over time. However, the same factors that influence any investment’s price also influence private equity market prices, as noted in this report’s introduction.

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