Africa’s private sector needs to grow to increase investor interest in secondary markets, experts told Semafor, after new research showed the continent lags behind other regions.
The value of global secondaries deals — transactions in which an investor purchases an asset from another investor — rose 45% to a record $162 billion last year, according to the report by New York-based Global Private Capital Association, a trade group. This boom has been driven by asset managers like US giants Goldman Sachs, Blackstone, Lexington Partners, and French firm Ardian, who have each raised tens of billions of dollars for dedicated secondary funds since 2021.
Activity in Africa has been more quiet, however. GPCA, in its report published in August, said a limited pool of international buyers and local specialists compared to Asia, and other more mature markets, has constrained secondary activity in Africa. It also said the dominance of development finance institutions of the capital base for African funds, and their historical unwillingness to sell on the secondary market, have limited deal activity.
Jeff Schlapinski, GPCA’s managing director of research, said only “a few local funds are active in this space” in Africa, adding that an increase in the number of dedicated secondary funds in Africa will require continued private sector growth “so that there is a wealth of different opportunities for investors to pursue.”
Richard Okello, co-founder of Sango Capital, an African private equity and venture capital investor, said the continent’s private capital sector has historically been unable to “attract the right buyers” due to a lack of investors selling a large amount of assets. “For players from other geographies to come buy secondaries from Africa, the transaction size has to make sense, which means you need lots of sellers willing to sell large chunks,” Okello said.