PE Investments and Exits Reach 37 Deals by October 2023
According to a report by advisory firm I&M Burbidge Capital, private equity (PE) investments and exits in East Africa had reached 37 deals by October 2023. This indicates a strong recovery in deal activity from the decline seen in 2020 and 2021 due to the global pandemic. The report shows that PE deals have been steadily increasing since 2022, with 2023 maintaining this momentum.
VC Deals in East Africa Surge to 33 by October
In addition to the increase in PE deals, the report also highlights a surge in venture capital (VC) deals in East Africa. By October 2023, there were a total of 33 VC deals recorded in the region. This indicates a growing interest in funding startups and early-stage businesses in East Africa, which is a positive sign for the entrepreneurial ecosystem in the region.
East Africa Records 114 Deals, Kenya Leads with 81
The report reveals that a total of 114 deals were recorded across East Africa by the end of October. Of these deals, 81 were signed in Kenya, making it the leader in deal activity. This highlights Kenya’s position as a key investment destination in the region and showcases the country’s potential for attracting both domestic and international investors.
Deal Activity Picks Up in 2022 and Maintains Momentum in 2023
After experiencing a decline in deal activity in 2020 and 2021, East Africa’s investment landscape began to recover in 2022. The report indicates that this recovery has continued into 2023, with similar levels of deal activity expected compared to the previous year. While the macroeconomic challenges may weigh on mergers and acquisitions, the report suggests that the demographic imperative of being in Africa for global companies will likely lead to an increase in M&A activity in 2024.
More PE Exits Expected, M&A to Increase in Africa in 2024
The CEO of I&M Burbidge Capital, Edward Burbidge, predicts that there will be more PE exits in the coming years. Despite the challenging macroeconomic environment, he expects the demographic imperative of being in Africa to outweigh the challenges and lead to an increase in mergers and acquisitions in 2024. Additionally, the report suggests that there may be additional climate finance agreements and a modest rise in public capital market agreements in the future.
Considering the significant investments made by Development Finance Institutions, these have resulted in the largest individual agreements in terms of ticket sizes. This highlights the importance of these institutions in driving investment and development in East Africa. Overall, the report paints a positive picture for the investment landscape in the region, with increasing deal activity and potential for future growth.
Analyst comment
Positive news: The report indicates a strong recovery in PE and VC deal activity in East Africa, with steady increases since 2022 and a surge in VC deals. Kenya leads in deal activity, showcasing its potential as an investment destination. The report predicts that M&A activity will increase in 2024, driven by the demographic imperative of being in Africa. Development Finance Institutions play a significant role in driving investment and development in the region.
As an analyst, I expect the market to continue its recovery and experience further growth in deal activity. The increasing interest in funding startups and early-stage businesses, as well as the potential for more PE exits and M&A activity, indicate a positive outlook for the investment landscape in East Africa.
