Key Points:
- East Africa experienced positive growth in 2023 due to private equity and venture capital investments and exits.
- By October 2023, there were 37 private equity deals and 33 venture capital deals recorded in the region.
East Africa sustained its positive growth trajectory from 2022 with over 114 investment deals in 2023. The growth was fueled by 37 private equity deals and 33 venture capital deals, according to advisory firm I&M Burbidge Capital. Kenya alone accounted for 81 of the recorded deals. The report indicates that although the pandemic caused a decline in deal activity in 2020 and 2021, it began to pick up in 2022 and maintained momentum in 2023.
“It looks likely that the number of deals will have been roughly similar in 2023 to 2022, but the value of deals has increased a great deal. Given that 2022 was a big increase over 2021, this means it was a fairly positive year,” said I&M Burbidge Capital CEO Edward Burbidge. He also added that there will likely be more private equity exits in the future and an increase in mergers and acquisitions in 2024.
Development Finance Institutions (DFIs) played a significant role in driving investment in East Africa. Some notable DFI deals in 2023 included a $207 million loan transaction from the International Finance Corporation to Seacom, and a $72 million loan from the African Development Bank, Finnfund, and the Eastern and Southern African Trade & Development Bank to energy firm Globelec for the construction of a geothermal power plant.
In conclusion, East Africa’s positive growth in 2023 was driven by private equity and venture capital investments and exits. Despite the challenges posed by the pandemic, the region saw an increase in deal activity, with Kenya leading in the number of investment deals. Development Finance Institutions also played a crucial role in driving investment with notable deals in the energy sector.
