African PE exits hit record high in 2016

A recent report released by EY and the African Private Equity Venture Capital Association has shed light on the increasing number of exits achieved by private equity (PE) firms in Africa. The report revealed that in 2016, there were a record 48 exits, marking a significant uptick in sales to PE and other financial buyers. Enitan Obasanjo-Adeleye, the Director of Research at AVCA, shared insights on this trend in an interview with CNBC Africa. The study, conducted over a three-year period with data dating back to 2007, highlights the resilience and growth of the private sector industry in Africa, despite economic uncertainties in some key markets. One of the key findings of the report was the rise in PE to PE sales, accounting for over a third of exits in 2016 compared to 16% in 2015. This increase reflects the maturing market where PE firms are scaling up their investments and attracting new players who see opportunities for growth and value creation. The report also highlighted the diversification of sectors driving exits, with financials, consumer goods, services, and telcos emerging as key sectors attracting investments and generating exits. While historically financial services have been a significant part of exits, the report noted a rise in sectors such as industrials and healthcare in 2016. This diversification indicates a shift towards consumer-driven sectors in PE investments in Africa. In terms of regional trends, South Africa continued to dominate the exit landscape, accounting for around 40-45% of exits. However, other African regions like North Africa and East Africa have shown increased activity in recent years. North Africa, in particular, has seen a growth in exit activity due to improving perceptions of political stability in the region, while East Africa has witnessed an uptick in investment activity since 2011. Looking ahead, experts anticipate a trickle-down effect of increased investments translating into higher exit activity in the next three to five years across various African regions. Despite challenges in some Southern African markets like Mozambique, Angola, and Zimbabwe, the overall outlook for private equity exits in Africa remains positive, with opportunities for further expansion and growth. The report's findings underscore the resilience and potential of the private equity industry in Africa, highlighting the diverse sectors driving investments and exits across the continent.