African Private Capital activity declines by 11% YTD amid global market challenges – Report 

The African private capital industry has experienced a significant slowdown in deal activity for the second consecutive year, according to a report by the African Private Capital Association (AVCA).

Year-to-date (YTD) data shows a total of 287 deals, an 11% drop compared to the 324 deals recorded during the same period in 2023.

The report notes that, while 2024 has seen a modest decline in deal volumes, investment values have declined more dramatically, with the first quarter marking the worst-performing start to a year in five years.

By the end of Q3 2024, only $1.9 billion had been invested across Africa, representing a staggering 53% decline compared to the same period in 2023.

This figure also falls well below the five-year average of $4.2 billion for the first three quarters, marking the lowest YTD deal values since 2020.

Shift toward smaller deals 

The report highlights a notable shift in the size of deals taking place. For the first time in five years, smaller deals—those valued below $50 million—have driven the majority of deal activity.

“These deals accounted for over two-thirds (66%) of all transactions. Larger deals, particularly those valued above $50 million, saw a sharp contraction of 75% year-on-year (YoY).  

“Deals within the $50-99 million range were especially impacted, plunging by 92%, with no deals exceeding $250 million reported. 

“This shift reflects a strategic pivot among investors, who are focusing on smaller, more manageable investments to mitigate risk and optimize returns in an uncertain economic environment,” the report stated.

Impact on venture capital 

According to the report, the pullback from large capital commitments has had a significant impact on venture capital, private equity, and infrastructure investments.

• Venture capital continues to dominate the private capital landscape in Africa, accounting for 62% of deal volume and 52% of deal value.

• However, even this segment has not been immune to the downturn, with venture capital deal volumes decreasing by 21% and deal values nearly halving (down 49% YoY).

• Startups across the continent are responding to these challenges by scaling back growth initiatives and focusing on streamlining operations.

Private Equity 

The report revealed that private equity, on the other hand, showed a 28% YoY increase in deal volume, driven by more buyouts and growth capital deals.

Yet, this increase did not translate into higher investment values. Only $0.4 billion was deployed across private equity deals YTD, marking a 66% YoY decline and the lowest investment values in seven years.

• Notably, deals below $10 million showed some resilience, with investment in this category increasing from $35 million in 2023 to $55 million YTD in 2024.

• Infrastructure investments also faced a downturn, with deal values declining by 68% YoY to $0.2 billion.

• Despite the overall contraction, the completion of a $150 million senior loan by Africa Finance Corporation to Kamoa Copper in the Democratic Republic of Congo provided a significant boost to the sector.

Private debt 

However, in contrast to other asset classes, private debt has emerged as a relatively bright spot in the market.

• Deal values in this segment grew by 14% YoY, indicating a growing investor preference for secure and flexible investments amid market volatility.
• Although private debt values remain below the peaks reached in 2022, the asset class has proven to be a critical source of capital, particularly for the financial services sector.
• Lending companies, in particular, saw private debt deal values double compared to the same period in 2023.
• Meanwhile, AVCA noted that despite the cascade of declines across various investment classes, Africa remains an attractive investment destination with compelling opportunities.