Economy
Private Capital Slowdown in Africa Mirrors Global Investment Trends
The African Private Capital Association – today announced the release of the 2023 African Private Capital Activity Report, the anticipated annual report providing insight into dealmaking, fundraising, exits and the key trends shaping Africa’s private capital landscape.
In 2023, the global economy faced a series of interconnected shocks, including rising political tensions, increasing fragmentation in global trade, escalating interest rates and tightening monetary policies to address high inflation. Amidst volatile market conditions, dealmaking in Africa was not shielded from the global slowdown in private capital, leading to reduced investment activity on the continent. However, Africa experienced more robust performance than other regions, such as North and Latin America, which noted comparatively larger declines in deal activity.
Private capital activity resets after post-pandemic highs
In the new report, AVCA found that Africa’s total private capital deal volume declined for the first time since 2016, falling by 28% year-over-year (YoY) to 450 deals. Despite a reduction in the number of transactions, Africa showed resilience, returning to the steady growth trajectory the region drove until 2022 when investors deployed large reserves of capital that were not allocated during the Covid-19 pandemic. Compared with activity throughout the last decade, 2023 was the second-strongest year on record for deal volume in Africa. Notably, deal volume on the continent surpassed the annual average of 264 deals from 2012 to 2022 and the average of 387 deals from 2019 to 2022.
Venture Capital and Infrastructure drive investor appetite
Continuing established trends, investors favoured venture capital (VC) as the route to back promising African businesses with innovative, tech-enabled solutions in rapidly developing markets. VC maintained its four-year streak as Africa’s leading asset class, accounting for 68% of the total investment volume of private capital activity across the continent in 2023.
The report notes that infrastructure had an impressive year for capital raising and deployment as the only asset class to benefit from increased funding in 2023, with deal values surging to US$1.8bn – a remarkable threefold YoY increase. Investments in renewable energy largely fueled this trend, indicating a growing interest in leveraging Africa’s abundant solar, hydro, biomass, and wind potential to accelerate the clean energy transition.
Shifting trends and familiar patterns
In a departure from previous years, Southern Africa reclaimed its dominance as one of Africa’s top investment destinations. The sub-region attracted 119 capital investments at US$2.6bn, the highest volume (together with West Africa) and the value of deals across the continent. South Africa accounted for the majority of investments in Southern Africa, with 81% of deals in the sub-region, due to growth across the IT and industrial sector and a rise in VC investments in software and services, logistics and transportation.
In line with AVCA’s previous research, the Financials, Information Technology, and Consumer Discretionary sectors remained the most attractive sectors, accounting for 54% of the total volume of private capital deals in 2023. This trend replicates investor activity noted in previous years as digital financial services and e-commerce expand to meet growing consumer demand, presenting more opportunities for investors.
Final close funds show a modest decline and interim fundraising surges
Notwithstanding final closed funds declining by 9% YoY, investors continued a trend of increasingly high values of capital raised for private debt and VC funds. Interim fundraising also surged across the continent, with Africa-focused fund managers achieving 40 interim closes. The uptick in private debt interim fundraising underscored growing interest in private debt as an asset class, stepping in to fill the gap left by commercial banks as investors seek protection from rising interest rates.
Exit market resets to pre-2022 averages
Despite a 48% YoY decline in volume, Africa recorded 43 exits in 2023, which marks a return to pre-2022 averages of 42 per year. All sub-regions in Africa experienced a YoY decline. Economic challenges were exacerbated in 2023, ending the exit rush in Africa of 2022 led by fund managers dealing with a backlog of mature portfolio companies from the Covid-19 pandemic. Southern Africa, demonstrating its position as a mature exit market, was the most popular sub-region for exits, increasing its overall share of exits to 36% YoY.
Abi Mustapha-Maduakor, Chief Executive Officer, AVCA, said: “Despite global economic headwinds, we are pleased to see Africa-focused investors’ ongoing commitment to the continent, particularly in venture capital – the continent’s leading asset class. Whilst there were dips in investment activity across many asset classes, infrastructure proved to be resilient, as the only asset class to receive increased funding during the year. Based on this report, our expectation for the coming year is that investors will remain committed to investment opportunities that leverage disruptive tech on the continent.”
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited returned to green territory on Friday, closing higher by 0.10 per cent after investor sentiment turned bullish.
Business Post reports that the market breadth index was positive yesterday after the bourse ended with 29 appreciating equities and 21 depreciating equities.
Linkage Assurance gained 10.00 per cent to trade at N1.43, Livestock Feeds appreciated by 9.93 per cent to N8.41, Mutual Benefits jumped by 9.84 per cent to 67 Kobo, UBA soared by 5.75 per cent to N36.80, and Oando grew by 5.59 per cent to N51.00.
Conversely, Red Star Express lost 9.91 per cent to finish at N4.82, Learn Africa depreciated by 9.85 per cent to N3.02, FTN Cocoa declined by 9.43 per cent to N4.80, Coronation Insurance slumped by 9.39 per cent to N2.22, and Ikeja Hotel slipped by 9.35 per cent to N9.70.
Customs Street grew yesterday as a result of buying interest in banking equities, which dominated the activity chart, according to data from the bourse.
Fidelity Bank transacted 62.3 million shares for N1.1 billion, Access Holdings traded 38.3 million equities worth N843.7 million, Tantalizers sold 32.0 million stocks valued at N99.2 million, Veritas Kapital exchanged 31.4 million shares worth N38.4 million, and Zenith Bank traded 22.7 million equities valued at N1.1 billion.
At the close of trades, a total of 397.2 million stocks worth N14.2 billion exchanged hands in 10,099 deals compared with the 310.5 million stocks valued at N6.3 billion traded in 10,182 deals a day earlier, indicating a decline in the number of deals by 0.82 per cent, and the growth in the trading volume and value by 27.92 per cent and 125.40 per cent, respectively.
The industrial goods and commodity sectors remained unchanged during the session, the insurance and consumer goods indices tumbled by 0.49 per cent and 0.02 per cent apiece, while the energy and banking counters went up by 0.50 per cent and 0.12 per cent, respectively.
The bargain-hunting activities of the market participants lifted the All-Share Index (ASI) on Friday by 104.19 points to 104,962.96 points from 104,858.77 points and the market capitalisation increased by N66 billion to N65.820 trillion from N65.754 trillion.
By Adedapo Adesanya
The last trading session this week at the NASD Over-the-Counter (OTC) Securities Exchange ended on a negative note with a 0.44 per cent decline on Friday, March 21.
The market capitalisation of the OTC securities exchange went down by N8.67 billion to N1.939 trillion from N1.948 trillion and the NASD Unlisted Security Index (NSI) ended the session at 3,358.61 points after dropping 15.01 points from the preceding day’s 3,373.62 points.
Trading data showed an increase of 50.7 per cent in the volume of securities transacted to 304,188 units from the 201,873 units transacted in the previous trading day, the value of transactions surged by 1,214.8 per cent to N10.2 million from N776,509.51, and the number of deals rose by 88.2 per cent to 32 deals from 17 deals.
Yesterday, FrieslandCampina Wamco Nigeria Plc lost N1.84 to trade at N37.17 per share versus Thursday’s closing price of N39.01 per share, Central Securities Clearing System (CSCS) Plc depreciated by N1.01 to sell at N22.84 per unit compared with the preceding day’s N213.85 per unit, and Afriland Properties Plc declined by 2 Kobo to close the day at N19.50 per share versus the previous session’s N19.52 per share.
At the close of trading activities, Impresit Bakolori Plc was the most active stock by volume on a year-to-date basis with 533.9 million units worth N520.9 million, followed by Industrial and General Insurance (IGI) Plc with a turnover of 69.9 million units valued at N23.7 million, and Geo Fluids Plc with 44.1 million units sold for N88.9 million.
Similarly, Impresit Bakolori Plc was the most active stock by value on a year-to-date basis with a turnover of 533.9 million units worth N520.9 million, trailed by FrieslandCampina Wamco Nigeria Plc with the sale of 13.2 million units valued at N511.8 million, and Afriland Properties Plc with 17.6 million units sold for N360.1 million.
By Adedapo Adesanya
The value of the Naira depreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, March 21 by N2.72 or 0.18 per cent to settle at N1,537.05/$1 compared with the preceding day’s N1,534.33/1$.
In the same official FX market, the exchange rate of the Nigerian Naira and the Pound Sterling and the Euro remained unchanged at N1,972.89/£1 and N1,657.81/€1, respectively.
At the parallel market segment, the local currency tumbled against the Dollar during the trading session by N5 to trade at N1,590/$1 versus Thursday’s closing price of N1,585/$1.
The pressure on the market continued as the Dollar strengthened in the international market, making currencies like the Naira weaker.
The continuous downward trend of the Naira has raised concerns about the effectiveness of recent injections into the market even as the Central Bank of Nigeria (CBN) channeled more than $55 million into the banks during the week.
In the cryptocurrency market, most tokens as prices inversed with the wider financial markets, which are down on tariff worries and decreased corporate earnings.
On the regulatory front, the US government is moving towards a market structure bill that has been touted as historic.
Solana (SOL) appreciated by 1.2 per cent to sell at $129.31, Dogecoin (DOGE) rose by 0.9 per cent to $0.1692, Ethereum (ETH) went up by 0.9 per cent to $1,988.34, and Ripple (XRP) added 0.8 per cent to close at $2.40.
Further, Bitcoin (BTC) expanded by 0.6 per cent to $84,293.76, Binance Coin (BNB) increased by 0.4 per cent to $631.94, and Cardano jumped by 0.3 per cent to end at $0.7134.
On the flip side, Litecoin (LTC) went down by 1.8 per cent to $91.25, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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