Emmanuel Ochayi
Equity Takes the Lead in Private Capital Investment
Private capital investment in Africa reached $2.27 billion in the third quarter of 2024, with equity-based transactions dominating the market. A report from Stears, a data-driven African-focused platform, revealed that out of 73 private market deals recorded in the period, 75% included an equity component.
“Equity transactions were the clear favourite, with 71% of the deals being exclusively equity-based,” Stears stated. In contrast, only 19% of the deals relied on debt financing, emphasising a clear preference for equity across sectors.
Join our WhatsApp ChannelTechnology and Consumer Goods Outpace Other Sectors
The technology and consumer goods sectors led in equity investment, accounting for 90% and 86% of deals, respectively. However, the report noted one significant exception: Terrapay, a digital payment platform, secured a $95 million debt package to expand its African operations.
Stears explained, “The financing was sourced from global investors, including OP Finnfund Global Impact Fund I and the International Finance Corporation, signalling strong interest in Africa’s digital infrastructure.”
These developments underline the increasing role of private capital investment in supporting innovation and consumer-driven growth across the continent.
Agriculture and Energy Drive Debt Financing
While equity dominated overall investments, debt financing focused heavily on agriculture and energy. These sectors accounted for 79% of all debt-based deals, more than doubling their contribution to total private capital investment.
According to Stears, “Debt financing plays a critical role in sectors that require long-term infrastructure development, such as agriculture and energy.”
North and Southern Africa Lead Equity Deals
Regionally, North and Southern Africa stood out for their dominance in equity-focused transactions. North Africa reported the highest percentage of deals with an equity component at 86%, while Southern Africa led in equity-only deals at 79%.
These trends highlight how private capital investment continues to shape regional economic priorities, with equity serving as a key driver for growth in these areas.
Experts Discuss the Implications
Financial analysts emphasise the long-term impact of these investment patterns on Africa’s economic development. “The growth of equity transactions indicates a robust investor confidence in Africa’s potential,” said Bola Adeyemi, a Lagos-based investment consultant.
She added, “The preference for equity reflects a willingness to take calculated risks for higher returns, especially in thriving sectors like technology and consumer goods.”
Private capital investment is increasingly steering Africa’s economic narrative, with equity deals shaping the future of critical sectors. As debt financing continues to play a role in long-term projects, the continent’s private market remains dynamic and diverse.
