Private Equity in Africa: Where Institutional Capital Is Going

Africa’s private capital market opened 2026 with its strongest quarter in four years. But the headline numbers conceal a more important story: capital is concentrating in fewer, larger deals, and the institutions writing the cheques are not the ones most people expect.

The Headline Numbers: A Market Rebounds

Disclosed deal value across Africa hit **$16.1 billion in the first quarter of 2026**, up sharply from $5.8 billion in the same period a year earlier . The continent recorded 172 transactions, down from 201 a year earlier, but the average deal size rose as capital concentrated in larger, more strategic investments .

Two Nigerian transactions alone accounted for roughly 63% of total disclosed value: MTN’s $6.2 billion acquisition of IHS Holding’s Nigerian operations, and a $4 billion debt financing for the Dangote Petroleum Refinery .

This is not a broad-based recovery. It is a market where a handful of mega-deals drive the headline figures, while the middle market—deals between $2.5 million and $75 million—finds itself squeezed .

The Sectoral Shift: Where the Money Is Going

Financial Services Lead

Financial services accounted for 29% of all transactions in Q1 2026, driven largely by lending to small and medium-sized businesses. MSME lending alone represented nearly a tenth of total deal activity .

West Africa dominated this segment, accounting for 48% of all financial services transactions, reinforcing its position as the continent’s primary hub for fintech and lending activity .

Energy and Infrastructure Dominate Value

When measured by capital deployed, energy and infrastructure dwarf other sectors. Energy and utilities appeared in 60% of all LP commitments in Q1 2026 .

Africa50’s Infrastructure Acceleration Fund raised $300 million by its third close**, with a final target of **$400 million, from 24 investors including pension funds, sovereign wealth funds, insurers, commercial banks, and DFIs. The fund will invest in equity and quasi-equity in power, transportation, water, and digital infrastructure.

Agribusiness Surges

Agribusiness reached a record 117 deals and $2.6 billion in capital deployed in 2024, surpassing fintech in deal volume for the first time. DFIs accelerated mandates tied to food security following Russia’s invasion of Ukraine, while PE funds sought predictable cash flows in the post-bubble environment .

Critical Minerals Recover

Mining of critical minerals—lithium, cobalt, copper, and graphite—recovered to **$3.2 billion in 2025** from a trough of $264 million in 2022, driven by demand for electric vehicle battery supply chains .

The Institutional Shift: DFIs and Local Pensions

Development Finance Institutions Dominate

The most consequential structural shift in African private capital is the rise of Development Finance Institutions (DFIs) as the dominant capital provider.

DFIs’ share of total African private capital deployed rose from 30.5% in 2017 to 81.5% in 2024 . The withdrawal of US and European private funds following the 2022 Federal Reserve rate hikes turned what were once complementary financiers into primary market makers.

The most active LPs in Q1 2026 were DEG (Germany), Proparco (France), and British International Investment (UK) . The European Investment Bank emerged as the most significant by disclosed value, committing $210 million—nearly a quarter of total disclosed capital during the quarter .

This dependency carries a risk. Cuts to USAID, reductions in European development aid budgets, and tightening constraints at national development banks could, if concurrent, remove a funding source for which no private substitute currently exists .

African Pension Funds: The Sleeping Giant Awakens

Africa’s pension funds hold an estimated $1.8 trillion to $2 trillion in assets . Almost none of it is working for the continent’s real economy.

Most African pension assets remain parked in sovereign bonds and bank deposits. Even where regulation permits allocations to private capital, actual allocations in many markets sit around 1% .

But the regulatory landscape is shifting:

Nigeria authorized pension-PE co-investment. Zambia raised PE limits from 5% to 15% .

Ghana has pioneered a domestic capital mobilisation framework. The National Pensions Regulatory Authority (NPRA) permits pension funds to allocate up to 25% of assets under management to private funds. The GVCA’s 5% Pension and Insurance Industry Compact, launched in April 2025, commits signatories to allocate 5% of AUM to VC/PE by 2026 .

The $70 million Ci Gaba Fund of Funds, managed by Savannah Impact Advisory, is Ghana’s first private fund of funds, designed to mobilise pension capital into private equity and private debt .

The logic is straightforward. As one analysis put it: “When pension capital flows into private equity, venture capital, private credit and infrastructure vehicles domiciled at home, it sets off a virtuous cycle: businesses grow, formal employment rises, wages generate more pension contributions, and that larger pool of domestic capital reinvests into the same asset classes” .

The Secondaries Market: The Missing Piece

For years, Africa’s PE industry has faced a capital-recycling problem. Funds raised about $30 billion over the past decade, but much of it remains tied up in ageing portfolios as managers contend with slower exits and currency volatility .

The average holding period for African PE investments is now 6.4 years, while North American and Asian benchmarks are below 6 years. Quick exits (under five years) have dropped from 33% in the early 2000s to just 12% in recent years .

DFIs, which anchor most African PE funds, are often constrained by their mandates against participating in secondary transactions and hesitant to sell at NAV discounts .

This exit backlog has direct consequences. Managers face pressure from LPs and struggle to raise new funds. Promising businesses remain stuck in portfolios for too long .

The secondary market is the structural solution. In May 2026, Sango Capital completed the largest LP-led secondary ever closed on African assets—a $120 million acquisition across four African funds from an undisclosed non-African institutional investor exiting the continent. The portfolio spans approximately 30 underlying companies in 14 markets, across financial services, consumer staples, infrastructure, and light manufacturing .

The deal’s significance lies in what it reveals: global secondaries giants like Ardian, Lexington, and Blackstone are not buying African portfolios. The reason, as one investor put it, is that “adventurous firms of this size are not going to get out of bed for deals less than $100 million” .

Africa’s deal-size distribution—where transactions below $50 million represented more than half of total private capital deal value in 2024—sits structurally below their underwriting threshold .

This is the gap that African-focused secondary funds fill. As one practitioner argued: “A mature secondary market would not only recycle capital more efficiently but also strengthen Africa’s private-equity ecosystem” .

The Two-Speed Market

The data points to a market that is becoming bifurcated.

Large-scale, defensive infrastructure plays—telecoms, energy, financial services consolidation—attract billions in capital from DFIs and institutional investors .

Early-stage and mid-market companies face a high bar to graduation. Seed and pre-seed financing collapsed by 81% between 2021 and 2025—from 509 deals to 98 . The middle market’s share of disclosed deals fell to 37% in Q2 2026, from 54% in Q1 .

Private equity surpassed venture capital in deal volume for the first time since 2019 in Q1 2026—63 PE transactions against 35 for VC . This is a structural rotation from return-driven VC to institutional PE, reshaping who funds what on the continent.

What This Means for Ghana

Ghana sits at the intersection of these trends. It is one of Africa’s “Big Five” markets for deal activity, alongside Nigeria, Kenya, Egypt, and South Africa . But its deal count is often linked to multi-country investments originating from Nigeria rather than purely domestic activity .

Ghana’s pension fund reforms—the 25% alternative allocation cap, the GVCA 5% Compact, and the Ci Gaba Fund of Funds—position it as one of the continent’s most credible examples of how domestic pension savings can be channelled into private equity .

The Ci Gaba model—local currency denominated, with a 30% first-loss layer from catalytic capital—offers a template for other African markets. If it succeeds, it could unlock a meaningful portion of Ghana’s GH¢100 billion pension pool for productive sectors rather than sovereign debt.

Quick Facts

Frequently Asked Questions

1. Where is institutional capital going in African private equity?
Capital is concentrating in financial services (29% of deals), energy and infrastructure (60% of LP commitments), agribusiness, and critical minerals. Large-scale deals dominate, while the middle market is squeezed .

2. Who are the dominant investors in African private equity?
Development Finance Institutions (DFIs) dominate, accounting for 81.5% of total capital deployed in 2024. The most active LPs in Q1 2026 were DEG (Germany), Proparco (France), and British International Investment (UK) .

3. How much do African pension funds invest in private equity?
Most African pension assets remain in sovereign bonds and bank deposits. Even where regulation permits 10% or more to private capital, actual allocations sit around 1%. Africa’s pension pool is estimated at $1.8–2 trillion .

4. What is the Ci Gaba Fund of Funds?
Ci Gaba is Ghana’s first private fund of funds, a $70 million vehicle managed by Savannah Impact Advisory. It is designed to mobilise pension capital into private equity and private debt, with more than two-thirds anchored by Ghanaian pension funds .

5. What is the Sango Capital secondary deal?
Sango Capital completed a $120 million LP-led secondary acquisition across four African funds in May 2026—the largest documented secondary transaction in African private equity. It spans 30 underlying companies in 14 markets .

6. Why is the secondaries market important for African private equity?
African PE funds have raised about $30 billion over the past decade, but much remains tied up in ageing portfolios. The average holding period is 6.4 years, and quick exits have dropped to 12%. A mature secondary market would recycle capital more efficiently .

7. What sectors are attracting the most private capital in Africa?
Financial services leads deal activity (29%), followed by energy and utilities, industrials, information technology, and consumer discretionary. Agribusiness surged to record levels in 2024, and critical minerals recovered to $3.2 billion in 2025 .

8. What is the two-speed market in African private equity?
Large-scale infrastructure and consolidation deals attract billions from DFIs and institutional investors, while early-stage and mid-market companies face a high bar to graduation. PE surpassed VC in deal volume for the first time since 2019

Source: Accra Street Journal 

Last Updated on October 8, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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