The fundraising environment in East African region is expected to improve over the next 12 months as economic activity, confidence and investment pick up.
- 54 per cent of respondents sampled in the 2024 Deloitte Africa Private Equity Confidence Survey expect deal sizes to be below US$25m.
- A further 35 per cent expect them to be between US$25m and US$50m and about 12 per cent expect larger deals over the next 12 months of between US$50m and US$100m.
- While this is largely predictable as PE firms focus on SMEs in the region, the reduction in the percentage of respondents anticipating larger average deal sizes from last year is partly due to the increased cost of doing business following widespread local currency depreciation.
“Fundraising activity has fluctuated, with strong momentum in 2021 and early 2022, followed by a slowdown between 2023 and 2024 due to current economic conditions, particularly foreign exchange fluctuations and national debt levels in East African economies,” Christine Maina Chief Executive Officer East Africa Private Equity and Venture Capital Association (EAVCA) says.
“One challenge in East Africa’s PE landscape has been the relatively few successful exits. However, fund managers are adapting by employing innovative exit strategies and focusing on value creation to navigate macroeconomic complexities. Exit activity in the region is expected to increase as past PE investments come to maturity or fund lives come to an end,” she added.
The study indicates that despite these challenges, East Africa’s economic outlook remains promising. The region’s resilience, coupled with strategic investments and reforms, positions it well for sustained growth and development in the coming years.
The survey indicates that the fundraising environment is expected to improve over the next 12 months as economic activity, confidence and investment pick up. 62% of the region’s respondents believe the economic climate will improve in the next 12 months, with 34% expecting it to remain the same. This contrasts with respondents’ views from last year, when most respondents expected the economic climate to remain the same.
As the regional frontrunner in terms of growth in Africa, East Africa promises growth on the back of renewed investor interest, economic stimulus from international organisations, and good services sector growth. Furthermore, stabilisation of political environments, reduced foreign exchange volatility, and increased private sector consumption are expected as further tailwinds to growth.
