The Briter Bridges Africa Investment Report 2021 has revealed that due to the mega-deal investments, the African fintech space witnessed a tremendous leap. Excerpts from the report highlighting the same are as follows:
“Financial technology companies continue to capture the largest share of funding on the continent, capturing almost two thirds of total funding into technology companies operating across Africa. The trend remains similar when factoring out deals above 550 million – fintechs still capture over 40%
of total invested. The dominance of financial technology is not only limited to volume but extends to overall funding activity. What e/se* We broke down the data to exclude respectively $100m+ deals and fintech from the equation. Logistics and energy follow by volume of funding, but the most
recent wave of digitisation – perhaps boosted by COVID-19 is propelling sectors such as e-commerce, agriculture, and healthcare.
It’s not everyday that you hear people claiming hundred million dollar business opportunities in Africa. Yet, after a gradual increase over the past few years, 2021 saw the highest number of single, non-M&A deals above 5100 million. Although highly concentrated in a few cases, only representing less than 3% of total disclosed, announced deals, yet capturing over 55% of total disclosed funding, this invesment size carries significant weight and acts as a pull factor for several investors.
A growing, less newsworthy market in Africa is that of debt financing. Leading funders such as Lendable and development finance institutions ranging from the FMO to the IFC have been providing debt for years but the number of companies choosing debt over, or in addition to, equity is growing. This is especially the case for revenue-making companies or those with a proven model. The list below explores some of the names that resorted to debt financing this year.
Africa’s startup M&A market in 2021, despite being almost twice as active than last year, with 33 acquisitions compared to 17 known deals in 2020, accounted for a smaller percentage of total capital flows compared last year, when almost 50% of investments consisted of acquisitions, e.g. WorldRemit’s deal into Wave, Stripe’s acquisition of Paystack. A particular characteristic of this year’s activity was the presence of several Africa-Africa startup transactions (see below), which indicates the rise of homegrown market consolidation. While disclosed acquisitions accounted for about half of total known investment in 2020, this year, it amounted to less than 1%, although several undisclosed, high-profile transactions could likely raise this figure to 3-4%.”Excerpts from the Africa Investment Report