Private equity (PE) activity in North Africa has been relatively resilient in spite of the political and economic events that have occurred in the last few years, with 156 reported deals taking place between 2007 and 2014 totalling US$5.3 billion.
This is the conclusion of new research undertaken by the African Private Equity and Venture Capital Association (AVCA) entitled “Spotlight on North Africa Private Equity 2007-2014”, which says North Africa accounted for 15 per cent of deal volume and value in Africa over the same period.
Almost 90 per cent of those 156 deals took place in Morocco, Egypt and Tunisia, with Morocco taking the single greatest share of deal volume. The region saw 61 PE exits during the period in question, with sales to African and multinational trade buyers constituting the most significant exit route for PE firms.
AVCA said the figures demonstrated that government support of foreign investment remained high, and that investors had remained relatively interested in the region in spite of the turbulence it has witnessed.
“Although there is a degree of uncertainty around investment and tax regulations in Egypt, the government is supportive of foreign investment,” the report said, though it added that regional expansion across North Africa was crucial to achieving scale and optimising exit routes and returns.
AVCA said the regulatory environment in Morocco was favourable, and supportive of both minority and majority shareholdings.
“Family businesses seeking to professionalise their management structure and improve transparency is helping to drive PE deal flow,” the report said.
“There is increasing diversification of exit routes. Expansion to different cities in Morocco is key to growth of portfolio companies in the country.”
The report said despite the “difficult and challenging” economic climate, the consumer sector in the region is growing and profitable.
Disrupt Africa reported in March AVCA had released data that revealed last year saw the second highest total value of PE deals in Africa on record, at a total value of US$8.1 million. Again looking at data covering the period between 2007 and 2014, the AVCA African Private Equity Data Tracker found 983 PE transactions at a total value of US$34.5 billion.
The highest value of transactions was recorded in 2007, with US$8.3 million worth of transactions concluded, while AVCA recorded a regional shift in PE activity in Africa over the course of the period. Whereas between 2007 and 2010 South Africa experienced the highest share of PE transactions, at 28 per cent of the African total, between 2011 and 2014 this figure dropped to 24 per cent; in favour of West Africa, which saw activity rise to 25 per cent.
