Market News

By Oluwakemi Abimbola

Nigeria, South Africa, Kenya, Ghana, and Egypt accounted for an overwhelming 85 per cent of all private market deals in Q3 2024, the latest Stears Private Capital in Africa Report for Q3 2024 has revealed.

According to the report, published on Wednesday, this means that only 15 per cent of transactions occurred outside these major economies, underscoring their outsized appeal to private investors in Africa.

The five countries which Stears called its Big 5 economies cornered deals in technology and energy.

The Stears Private Capital in Africa Report is a quarterly analysis of African private market transactions. It examines key trends in private investments, providing valuable insights for fund managers and corporate decision-makers on the countries, industries, and companies attracting private capital.

The report added that investments in non-Big 5 countries were more likely to be debt-based (28 per cent compared to 18 per cent in the Big 5), reflecting the relatively stable and lower-risk nature of financing in these markets.

“Sectoral trends further highlight the Big 5’s dominance. All technology investments during the period involved a Big 5 country, showcasing the enabling environments these economies have created for startups and scaleups. The energy sector, however, saw the narrowest gap between Big 5 and non-Big 5 involvement, with 85 per cent of energy transactions linked to Big 5 countries versus 62 per cent in others,” the report said.

On a regional level, Southern Africa led private market transactions in Q3 2024, accounting for 45 per cent of recorded deals, followed closely by East Africa (41 per cent) and West Africa (33 per cent). Central Africa lagged significantly, contributing just eight per cent of transactions during the period.

“South Africa and Kenya were standout performers, each accounting for a third of all private market deals in Q3. South Africa dominated Southern Africa’s activity, featuring in 73 per cent of the region’s deals, while Kenya was central to East Africa, contributing to 80 per cent of the region’s transactions.

“Rwanda, with 15 per cent of all African deals (37 per cent of East Africa’s), was the second-most active East African country. In contrast, Namibia, with 5 per cent of African deals (12 per cent of Southern Africa’s), played a more subdued role in Southern Africa. West Africa exhibited a more balanced distribution of deals.

“While Nigeria led the region with 71 per cent of transactions, countries like Ghana (38 per cent), Côte d’Ivoire (33 per cent), and Senegal (29 per cent) accounted for healthy shares, underscoring a broader investment spread. In contrast, North Africa showed significant concentration, with Egypt attracting 93 per cent of the region’s transactions, making it the most dominant country by regional share during the period. Morocco followed distantly, contributing just 21 per cent of North African deals,” the report added.

In terms of the sector that enjoyed the most investment, Financial Services deals were overrepresented in East and West Africa, with each accounting for 46 per cent of all financial services transactions, exceeding their respective shares of overall deals (East Africa: 41 per cent, West Africa: 33 per cent).

“Technology investments also showed regional concentrations, with East Africa leading at 60 per cent of all technology deals, followed by Southern Africa at 45 per cent. While Southern Africa performed well in technology relative to its average deal activity (45 per cent), its financial services representation was below the continental average at 33 per cent. In contrast, West Africa excelled in the energy sector, contributing 46 per cent of all energy deals, significantly above its overall 33 per cent deal share.

“Interestingly, North and Central Africa, though representing smaller portions of financial services deals continent-wide, were disproportionately focused on this sector. Financial Services accounted for 57 per cent and 67 per cent of total deals in North and Central Africa, respectively, reflecting investor preference for the continent’s most active sector when considering less active regions,” the report indicated.