About 25 percent of all PE dollars invested in Africa from 2007 to 2014 went to telecommunications-related business. That compares with 9 percent each for materials and energy. Fifteen percent went to "consumer discretionary," which are items that people choose to buy, such as televisions or cars, versus "staples" like food and cleaning products that see less change in demand over economic cycles.
Counted by the number of deals, the most went to companies in the financial sector (17 percent), followed by consumer discretionary, industrials and consumer staples (14 percent apiece), according to AVCA.
"Demographic shifts, including an increasingly urbanized population with more disposable income, mean that Africa presents a staggering amount of opportunities for businesses that serve these shifts," AVCA said in a recent research report. "PE investors are perfectly positioned to invest and benefit from this demographic shift by investing in businesses that support what is still a largely underserved middle class population."
Regionally, West Africa—driven by powerhouse Nigeria—is getting the most investment, about 25 percent of all African PE transactions, according to AVCA. South Africa, previously the leader, is second at 24 percent.
More investments are set to come. About $22 billion has been raised by Africa PE funds since 2007, not all of which has been spent, according to AVCA data. And Africa PE fundraising reached $1.8 billion in 2014, with an additional $2.3 billion of interim closes announced during the year. "Closes" are industry lingo for the end of a fundraising period. Some are final—no more new money from investors—while others are temporary and more capital can be raised.