The total value of private capital deals reported in Africa hit a record $7.4 billion in 2021, more than double the previous year’s total, amid pent-up demand following a COVID-19-related hiatus.
The African Private Equity and Venture Capital Association’s “2021 Annual African Private Capital Activity Report,” published Tuesday, said deal value was up from $3.4 billion in 2020. The annual average deal value for the five years ended 2020 was $4 billion.
“The accumulation of unspent capital pre-COVID-19 pandemic, coupled with the COVID-19 deal activity hiatus, resulted in fund managers’ increased appetite to deploy capital to work across the continent,” the report said. “Consequently, this remarkable increase of investment activity in 2021 was mainly the result of the accelerated pace of capital deployment by private capital fund managers in the post-Covid era across various investment strategies and sectors.”
Of the $7.4 billion in deals reported in 2021, 54% was invested in venture capital funds, 24% in infrastructure funds, 19% in private equity funds and 3% in private debt funds
The total volume of private capital deals reported in Africa also increased, to 429 in 2021 from 258 deals in 2020.
By geography, West Africa attracted the largest share of deals with 33% of the total 429 transactions, followed by Southern Africa (20%), North Africa (17%), East Africa (16%) and Central Africa (1%). The remaining 13% of deal volume was located across multiple regions, the report said.
By value, however, multiregion deals took the lion’s share, at 40%, followed by West Africa (24%), Central Africa (14%), North Africa (10%), Southern Africa (9%) and East Africa (3%).
The financial sector was the most active by volume at 30%, also attracting 39% of deal value in 2021. The rise of financial technology played a large part in financial’s success, with several traditional banks closing during the pandemic that resulted in people turning to mobile money and digital banking applications, said a news release accompanying the report.
Source: SOPHIE BAKER | pionline.com