Gladys Makumi | Director | Financial Advisory Leader | Deloitte Africa | mail me |
We are pleased to present our 2021 Africa Private Equity Confidence Survey (PECS). This publication is centred around valuable insights into how fellow private equity (PE) practitioners view the African PE landscape, specifically their future expectations over the next 12 months.
To supplement the forward-looking perspectives, the publication also incorporates publicly available macroeconomic data and commentary on the current PE landscape and foreign direct investment (FDI) trends. Prior editions of the PECS have focussed on East, Southern and West Africa.
For the 2021 publication, we are excited to have extended the survey to also include North Africa. Despite a challenging 2020 and the prevailing uncertainties around the timeframe of the pandemic, investment and economic conditions are expected to improve as countries implement a range of measures to recover from the of COVID-19.
While there will be various headwinds and challenges to navigate, including effective vaccine roll-out strategies, growth prospects are positive. As a proven agile asset class, the PE industry is expected to play a key role in the economic recovery and projected increase in investment activity over the next 12 months.
Economic climate
Although investment strategy and related returns will be key, we also foresee an increased social responsibility to drive PE activity. This aligns with the survey expectation that funding will largely be obtained from development finance institutions (DFIs).
Africa’s Gross Domestic Product (GDP) growth is forecast to rebound in 2021 and 2022 after the adverse impact of COVID-19 in 2020. This is supported by a projected improvement in exports, commodity prices, and private consumption.
Investment landscape
PE activity is expected to increase across all regions, driven largely by the anticipated rebound in economic activity. Respondents did however expect average deal sizes to largely remain below US$50m, in line with the growing level of mid-fund sized deal activity across the continent.
Fundraising environment
The fundraising environment is largely expected to improve or remain the same across all four regions, based on the expected improvement in economic forecasts and increase in transaction activity.
With the United States (US) and Europe expected to be the largest sources of funding for most of the African regions.
Sector focus
The COVID-19 pandemic has highlighted the importance of and likely greater focus on certain key sectors such as Healthcare and Pharmaceuticals, Education, and Technology, Media and Telecommunications (TMT).
