Africa’s private equity sector focus

The private equity investment focus is in line with available opportunities and driven by changing consumer needs.

Interesting trends in 2016 activity include a high number of transactions in information technology, at 21% of the total. This sector includes internet software and services industries. According to the SAVCA 2017 Private Equity Industry Survey, the largest reported deal in 2016 was the investment by Vantage Mezz III in Vumatel (Pty) Ltd, with an enterprise value of USD 1.9bn. The financials sector has the next highest number of transactions at 17% of the total.

Consumer discretionary and consumer staples make up 15% and 11% of the total number of transactions, respectively. Consumer products have historically been the focus of African funds. This is as expected due to the opportunities resulting from the overall growing population and growing middle class in emerging market economies. Within consumer discretionary, investor interest has moved toward online retail, education services, advertising and publishing, possibly showing a shift from a lower to a higher LSM group.

Sectors experiencing significant growth in activity include energy, where activity has more than tripled. Here investor focus is on renewables, benefiting the population and meeting high demand. Healthcare and pharmaceuticals have also shown significant growth over the year as consumers prioritise health and medical treatment, resulting in an increase in demand for quality healthcare institutions.

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