Nigeria’s Private Equity Investments Surge 322% In Q1 2024

Private equity investments in Nigeria surged by 321.8 percent in the first quarter (Q1) of 2024, driven largely by deals in the energy and educational technology (edtech) sectors.

According to a report by DealMakers Africa, a South African-based firm that tracks mergers and acquisitions (M&A) and corporate finance activities across the continent, the value of M&A in Nigeria rose to $2.59 billion.

This marks a significant increase from $614 million in the same period of 2023 and a 47.2 percent rise from $1.76 billion in Q1 2022.

For the first time in two years, Nigeria recorded the highest private equity deals on the continent. In Q1 of 2023, Zimbabwe had overtaken Nigeria, receiving the highest value of mergers and acquisitions.

However, in Q1 of 2024, Nigeria led the way, with Zambia, Morocco, Kenya, and Egypt trailing behind with $168.9 million, $132.9 million, $44.0 million, and $31.9 million respectively. Other countries in the report included Botswana ($10 million), Côte d’Ivoire ($3.52 million), Tunisia ($600,000), Ghana ($314,698), and Namibia ($100,000).

The report highlighted that West Africa, particularly Nigeria, dominated in total deal value, recording $2.6 billion and 20 deals. The largest deal of the quarter was Shell’s disposal of its onshore oil and gas subsidiary to Renaissance Africa Energy for $2.4 billion.

Despite Africa facing numerous challenges, the report noted that the continent holds the world’s largest mineral reserves and significant potential for renewable energy production. On January 16, Shell agreed to sell its Nigerian onshore subsidiary, Shell Petroleum Development Company of Nigeria Limited, to Renaissance.

This consortium includes four Nigerian exploration and production companies and an international energy group. Shell’s integrated gas and upstream Director, Zoë Yujnovich, stated that the agreement aligns with Shell’s strategy to exit onshore oil production in the Niger Delta, focusing on Deepwater and Integrated Gas investments.

Jens Kengelbach, managing director and senior partner and global head of M&A at Boston Consulting Group, noted significant transactions by BP and Eni in 2021 pushed the deal value up. However, in 2023, the deal value dropped to $7 billion across 440 deals, a 71 percent decrease compared to 2022. Despite this, countries like Morocco, Egypt, Nigeria, and Kenya are becoming more attractive for acquisitions, a trend expected to continue into 2024.

Kengelbach emphasised that energy and power transactions will be driven by major international oil companies optimising their portfolios through divestments of non-core assets, particularly in Africa. These companies are shifting away from non-strategic assets, spurring interest in both fossil fuels and renewable energy sources and infrastructure development.

Beyond the Shell deal, the DealMakers Africa report also revealed several other noteworthy transactions. Chapel Hill Denham announced a $7.4 million securitised funding for d.light’s off-grid solar program on February 12.

In January, Access Bank acquired a 69.7 percent majority stake in Uganda’s Finance Trust Bank. In March, Access Bank Plc announced the acquisition of KCB Group, with the deal’s value undisclosed. Additionally, Oak and Saffron acquired a 60 percent stake in Presco Plc, also for an undisclosed amount.

January also saw fintech platform Cleva secure $1.5 million in pre-seed funding from venture capitalists, and Zanza Finance received $2.3 million from VCs.

Access Bank received a $75 million loan from the Japan International Cooperation Agency (JICA) to finance climate change projects in Nigeria. Sahel Capital provided a $1.5 million trade finance loan to Acier Nigeria Limited, an agro-allied company, in February.

Further in February, All On invested $3 million in bridge funding for Nigerian solar company Arnergy, and Carbon acquired Vella Finance. Universal Music Group purchased a majority stake in Mavins Global for an undisclosed amount.

In March, a consortium of venture capitalists invested $100 million in Moove’s Series B funding round, and Africa Finance Corporation secured a $1.16 billion syndicated loan from investors including Société Générale, Bank Muscat, and Intesa Sanpolo Bank Luxembourg S.A.