Private equity firms present or operating in Africa face the risk of a slowdown due to the current coronavirus pandemic. Many companies that partner with private equity funds are also exposed to the negative consequences of the lockdown measures taken by several countries in the region to deal with the pandemic.

In South Africa, the Central Bank plans a quantitative easing strategy that will involve buying bonds to bring balance in the financial sector, especially the banking sector. For the time being, the arrangements for supporting investments by private equity firms and funds are not clearly defined.

According to data provided by the Crunchbase database, a total of $1.24 billion was raised over the first quarter this year from private equity firms. This is the lowest level for the period since 2016.

Since the companies benefiting from private equity investments are also likely to perform poorly, the South African Private Equity Association calls on sector players to support these companies. According to relevant data collected by the Ecofin Agency, 172 investment funds focusing on Africa are active in the region.

In addition to these investment funds, there are also development finance institutions with a stake in the capital of nearly 450 companies or investment funds. Private equity is as important a part of economic financing as the banking sector in Africa. Its evolution in the post-covid-19 years is to be followed.

Idriss Linge