HomeAnalysis2023 African Private Capital Activity Report Released

2023 African Private Capital Activity Report Released

AVCA

AVCA, the African Private Capital Association, announced the release of the 2023 African Private Capital Activity Report, the annual report providing insight into dealmaking, fundraising, exits and the key trends shaping Africa’s private capital landscape. 

In 2023, Amidst volatile market conditions globally, dealmaking in Africa decreased. However, the continent experienced stronger performance than other regions, such as North and Latin America, which noted comparatively larger declines in deal activity. Africa’s total private capital deal volume declined for the first time since 2016, falling by 28% year-over-year (YoY) to 450 deals. Compared with activity throughout the last decade, 2023 was the second-strongest year on record for deal volume in Africa. Notably, deal volume on the continent surpassed the annual average of 264 deals from 2012 to 2022 and the average of 387 deals from 2019 to 2022. 

Investors favoured venture capital as the route to back promising African businesses with tech-enabled solutions in rapidly developing markets. Infrastructure had an impressive year for capital raising and deployment. Investments in renewable energy largely accelerated this trend, indicating a growing interest in leveraging Africa’s abundant solar, hydro, biomass, and wind potential to accelerate the clean energy transition. 

Southern Africa was one of Africa’s top investment destinations. The sub-region attracted 119 capital investments at US$2.6bn. South Africa accounted for the majority of investments in Southern Africa, with 81% of deals in the sub-region, due to growth across the IT and industrials sector and a rise in VC investments in software and services, logistics and transportation.

In line with AVCA’s previous research, the Financials, Information Technology, and Consumer Discretionary sectors remained the most attractive sectors, accounting for 54% of the total volume of deals in 2023.

Despite a 48% YoY decline in volume, Africa recorded 43 exits in 2023, which marks a return to pre-2022 averages of 42 per year.

Commenting on the news, CEO Abi Mustapha-Maduakor said: “Despite global economic headwinds, we are pleased to see Africa-focused investors’ ongoing commitment to the continent, particularly in venture capital – the continent’s leading asset class. Whilst there were dips in investment activity across many asset classes, infrastructure proved to be resilient, as the only asset class to receive increased funding during the year. Based on this report, our expectation for the coming year is that investors will remain committed to investment opportunities that leverage disruptive tech on the continent.”

Read the full report here

VCWire

02/04/2024