The African private capital market witnessed remarkable growth in 2024, with disclosed deal values reaching a staggering $10.1 billion, marking a significant increase from the $6.7 billion recorded in 2023. According to the 2024 Private Capital in Africa Activity Report by Stears, this surge came despite a lower disclosure rate of 46 percent compared to the previous year’s 71 percent. The increase underscores the impact of mega transactions that fueled the expansion of deal values across multiple sectors.

In the fourth quarter (Q4) alone, the disclosed transactions amounted to $4.7 billion, contributing to the impressive full-year performance. The steady growth of private capital in Africa highlights the continent’s increasing attractiveness to investors seeking high-growth opportunities in emerging markets.

Equity Financing Remains Dominant in Private Capital Transactions

Throughout 2024, equity financing remained the most preferred funding structure in African private capital transactions. In Q4, 73 percent of transactions involved equity financing, while 31 percent incorporated a debt component. On a full-year basis, 81 percent of deals included equity financing, whereas only 26 percent involved debt.

While equity financing has been the dominant method across industries, debt financing played a more prominent role in agriculture and energy-related deals. The report also highlighted a rising trend in mezzanine and hybrid financing structures, signaling increased investor confidence in diversified financial instruments.

According to Michael Famoroti, Head of Research at Stears, the report’s findings reinforce Africa’s resilience in global private capital markets. “The FY2024 report highlights Africa’s growing importance in global private capital flows,” Famoroti stated. “Our analysis underscores the critical role of equity financing and the continued dominance of key economies like South Africa, Kenya, and Nigeria in shaping investment trends.”

Key Markets Leading Private Capital Investments in Africa

South Africa, Kenya, and Nigeria emerged as the leading destinations for private capital investments in 2024, collectively accounting for 74 percent of total transactions. South Africa and Kenya each represented 25 percent of the market, followed closely by Nigeria at 24 percent.

Egypt and Ghana also demonstrated strong performances, contributing 14 percent and 13 percent of the total transactions, respectively.

Egypt’s growth was driven by a high proportion of single-country investments, with 62 percent of deals occurring within its borders. This trend closely mirrored South Africa’s performance, where 63 percent of transactions were domestic. Meanwhile, Morocco also exhibited a preference for localized investments, with 52 percent of its deals taking place within the country.

The increasing prominence of North African markets, particularly Egypt and Morocco, highlights a broader shift towards regional investment patterns, where investors are prioritizing opportunities within specific economic zones.

Sector Breakdown: Financial Services and Technology Drive Growth

Financial services emerged as the most active sector in Africa’s private capital landscape in 2024, accounting for 22 percent of all transactions. The sector’s dominance was driven by increased investment in payment infrastructure and digital banking solutions. Within financial services, payments infrastructure accounted for 23 transactions, representing 29 percent of the sector’s total deals.

The consumer goods and services sector followed closely behind, comprising 20 percent of transactions, reflecting Africa’s expanding middle class and rising consumer demand.

The technology sector accounted for 17 percent of transactions, driven by continued investment in fintech, AI-driven solutions, and digital infrastructure.

Industrials represented 15 percent of total deal activity, benefiting from increased investments in logistics, supply chain management, and manufacturing. Meanwhile, the energy and agriculture sectors each recorded 45 transactions, making up 13 percent of total market activity.

Mega Deals Shaping Africa’s Private Capital Market

Several high-profile transactions contributed to the strong performance of Africa’s private capital market in 2024. Among the most significant deals were:

• Chappal Energies’ $1.2 billion acquisition of Equinor Nigeria Energy Company Limited, which included a $710 million purchase price and additional contingent payments.
• Indorama Fertilisers’ $1.25 billion debt financing led by the International Finance Corporation (IFC), one of the largest financing deals of the year.
• Eni’s $783 million sale of Agip Oil to Nigeria’s Oando, signaling continued consolidation in Africa’s energy sector.

Comparatively, the largest transactions in 2023 included BUA Cement’s $500 million debt facility from IFC and MNT-Halan’s $400 million capital raise. The rise in multi-billion-dollar deals in 2024 underscores the increasing scale and complexity of private capital transactions in Africa.

Key Investors: DFIs, Private Equity, and Venture Capital Firms at the Forefront

A diverse mix of investors played a crucial role in Africa’s private capital ecosystem in 2024. Development Finance Institutions (DFIs), venture capital (VC) firms, and impact funds were particularly active in funding deals across the continent.

Major DFIs, including the IFC, FMO (Netherlands Development Finance Company), and DEG (German Investment Corporation), played a significant role in financing large-scale transactions.

VC firms such as Norrsken22 and Launch Africa remained highly active, focusing on early-stage investments in fintech, agritech, and deep-tech startups.

Impact investment funds such as Sahel Capital, Incofin, and Acumen maintained strong transaction volumes, particularly in agriculture, renewable energy, and social enterprises.

The role of banks and DFIs in Africa’s private capital landscape was particularly pronounced. Afreximbank and Standard Bank alone accounted for approximately one-third of the disclosed transaction value in 2024.

DFIs collectively contributed 58 percent of the year’s disclosed transaction value, with institutions such as British International Investment (BII), the U.S. International Development Finance Corporation (DFC), and DEG being particularly influential.

The Rising Influence of Private Equity in Africa

Private equity (PE) firms continued to expand their footprint in Africa, with several large players emerging as key investors.

Notable private equity firms that made significant investments in 2024 included:

• Mergence Investment Managers and Development Partners International (DPI), both ranked among the top 15 investors.
• Helios Investment Partners, AfricInvest, and Verod Capital Management, collectively involved in deals totaling over $1 billion, accounting for 11 percent of disclosed transaction value.

The growing role of PE firms in Africa’s private capital market is a sign of increasing institutional confidence in the continent’s long-term economic potential.

Outlook for Africa’s Private Capital Market in 2025

The outlook for Africa’s private capital market remains strong heading into 2025. Analysts anticipate continued growth in equity financing, with an increasing shift towards blended financing models incorporating debt, mezzanine, and hybrid structures.

The technology sector is expected to see increased investment, particularly in AI, blockchain, and cloud computing solutions. Additionally, Africa’s renewable energy transition is likely to attract further private capital, with investors prioritizing solar, wind, and green hydrogen projects.

Furthermore, the ongoing expansion of the African Continental Free Trade Area (AfCFTA) is expected to facilitate cross-border investments and improve capital flows across the continent.

As global investors continue to seek exposure to high-growth emerging markets, Africa’s private capital market stands poised for further expansion, driven by innovation, infrastructure development, and a rapidly growing digital economy.

Conclusion

The sharp increase in private capital investment in Africa in 2024—rising from $6.7 billion in 2023 to $10.1 billion—underscores the continent’s growing appeal as an investment destination. The dominance of equity financing, the emergence of mega deals, and the strong involvement of DFIs, private equity firms, and venture capitalists reflect a maturing market with robust growth prospects.

As Africa continues to position itself as a key player in global private capital flows, the continent’s investment landscape is set to evolve, offering new opportunities for investors while driving economic growth and development.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

4th January, 2025