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. Second, we review the supply and demand of capital in the private market by examining fundraising for private equity funds. Last, we discuss the pricing of the listed market.
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.
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.