The number of exits achieved by PE houses in Africa has showed an upward trend with a record number of exits in 2016.
The bulk of PE exits continue to be concentrated in South Africa (SA). Exits in North Africa increased to its highest levels in 2016 and exits in West Africa also recovered in 2016.
Over the last 10 years, the top five countries accounted for 70% of PE exits.
The number of PE houses achieving exits in 2016 increased slightly to a new high of 31 PE houses, indicating that the African PE sector continues to mature despite recent economic headwinds, which a number of African economies have experienced recently.
Financial services, industrials, consumer goods and services continued to attract the highest number of PE exits between 2007 and 2016, and during the last three years. Exits from the healthcare and industrials sectors continued to increase.
An increase in the average holding period confirms our view that PE houses are inclined to hold their investments in portfolio companies for longer than developed markets. The average in 2016 is also distorted by a greater number of exits of infrastructure investments with longer hold periods.
A significant uptick in sales to PE and other financial buyers occurred in 2016 indicating a maturing and more competitive African PE industry. A marked decline in management buy outs (MBOs) and private sales occurred in 2016.
Exits to trade buyers still represent the most common exit route.
Local companies continued to represent the largest proportion of trade buyers.
Multinational financial investors account for the largest share of financial buyers, while interest from local financial investors has increased.
The increase in the proportion of multinational PE / financial investors is consistent with the understanding that global / pan-emerging market PE / financial investors view PE-owned companies as attractive investment opportunities.