top of page

DealMakers AFRICA Q3 2023


Africa icon.jpg

The evolution of private capital in East Africa

Kevin Kuria


In the last ten years, the East African private equity (PE) industry has recorded impressive growth, with 427 transactions announced. The value of transactions has also grown significantly, from US$649 million in 2013 to US$995 million in 2022. The industry has also evolved in sophistication, with investment structures increasing in variety and complexity. Investments now encompass growth capital, patient capital vehicles, buyout funds, and a range of mezzanine capital offerings. 

Kevin PictureLOW.jpg
Kevin Kuria

In the period between 2013 and H1 2023, PE investments underwent multiple cycles and have now matured, with general partners now employing more refined investment strategies. Private capital investments have become the primary type of corporate deal in the region, excluding debt from commercial banks. This shift is also due to the prolonged bear market in listed equities, and the collapse of public debt capital markets following defaults by several banks and major retailers. 

In this article, we will analyse the data behind these investments, examine the factors driving performance, and discuss the prospects for private equity in the next decade. This article is drawn from a larger publication – The Evolution of Private Capital in East Africa – published by I&M Burbidge Capital, the East Africa Venture Capital Association, and Briter Bridges on 12 September. 

A total of 427 private equity and direct DFI investments were recorded in the East African region between 2013 and H1 2023. Investment activity has steadily trended upwards since 2013, with a brief lull in 2017, attributable primarily to the elections in Kenya, then peaking in 2019 when the highest deal count of 59 investments was recorded. Since 2020, there has been a steady decline in investments. This trend is prima facie attributable to the COVID-19 pandemic and the resulting economic and civil restrictions, as well as the usual downturns associated with election cycles in the region. More broadly, longer fundraising periods for general partners, and aversion to first time fund managers, has also had an impact on the number of players executing deals in the market. 


It’s important to note that while there were direct investments by DFIs in all the years during the review period, our data only began distinguishing between PE and DFI investments in 2019.

Whilst there has been a general decline in PE investment activity in the latter years of the period under review, the total disclosed deal values have increased, indicating a shift in focus to larger ticket sizes. The total disclosed value between 2013 and H1 2023 was c. US$7,3 billion. Importantly, not all deals had disclosed values, and this number is, therefore, likely to be much higher. 

FY 2022 recorded the largest deal values in the last decade, and 2023 is well on track to surpass this with the H1 total disclosed deal value already at c. US$ 792 million vis à vis the previous year’s c. US$994 million for the total year.

The financial services sector attracted the most PE and DFI activity (investments and exits) in the last decade, accounting for 20% of all deals. The agribusiness, energy and ICT sectors comprise the rest of the top three, accounting for 14%, 12% and 12%, respectively. The financial services and energy sectors attracted the largest investment allocation, each accounting for 26% of the total disclosed deal values. The ICT and telecommunications sector is third, with 14% of all disclosed deal values during the period.

Kenya accounts for the lion’s share of all deals in the region, accounting for 69% of all transactions in the period, whilst Uganda accounted for 12%, Tanzania and Ethiopia 6% each, and Rwanda 5%. Kenya is considered a central hub for economic activity in the region, with a relatively well diversified economy less susceptible to commodity risks, as compared to other large African economies.

Publicly disclosed primary investments in private equity far outnumber exit transactions, with 427 investments compared to just 51 exits over the past decade. However, the actual number of exits may be higher, as some are investments exited to founders and management (which are not disclosed), while others are forced liquidations, which are not included in the data.

The financial services sector has recorded the highest number of exits with 14, whilst the healthcare and energy sectors comprise the rest of the top 3, with 9 and 7 exits respectively. As with the investments, Kenya recorded the lion’s share of exits with 36, followed by Uganda (8) and Rwanda with 3. Tanzania has had 2 announced exits, whilst Ethiopia has had one.

Regional PE exits have occurred in mainly three forms; sales to trade players, secondary buyouts, and MBOs. During the period, there has been only one instance of an exit through an IPO. The primary exit strategy for regional PE investments has been sales to trade players, with most buyers originating from Europe and Asia. However, secondary buyouts are now surpassing trade player sales in frequency, and the pool of potential buyers is expanding to include both pan-African and regional investors.

The recent increase in secondary buyouts can be attributed to various factors, including the relaxation of restrictions on such transactions and a rise in the number of funds willing to engage in majority transactions, particularily those involving secondary capital-only deals.

The East African region presents an attractive investment destination for both developmental and commercial private capital, given its strong fundamentals: 


  1. Positive demographics: The median age in the East African region ranges between 16 to 19 years, with a literacy rate of 71.3%. This, combined with a total population of more than 250 million people, presents a large addressable market for growth. 

  2. Significant recent investments in infrastructure: All of the region’s economies have invested heavily in infrastructure development in the last decade, with a focus on transportation, energy and ICT capacity. 

  3. Political stability: History has proven that the economies of East Africa ebb and flow with the winds of the  
    political cycle, with booms coming in the years following an election and slowdowns in the year of an election. This is primarily driven by concerns related to electoral instability.


These factors present a bulwark against which the private equity industry is expected to grow in the face of global headwinds, including climate change effects, geopolitical tensions and elevated global interest rates. The region is well poised to offer an attractive investment destination, with suitors coming from less traditional markets, such as South Asia and the Far East, in an increasingly multipolar world. 

Kuria is Senior Vice President | I&M Burbidge Capital

bottom of page