In the first half of 2026, something changed in who buys African companies from their investors. Exit activity held at 34 transactions, trade sales nearly doubled year on year to 53% of exits, and local corporates were behind two-thirds of the strategic acquisitions, according to the African Private Capital Association (AVCA). For fifteen years, the standard complaint about African private equity and venture capital was that investors could get in but couldn’t get out. On the latest numbers, they are getting out, and the buyer is increasingly an African bank, telco or conglomerate rather than a multinational.
That should be good news for the industry, and in one sense it is. But it moves the problem rather than solving it. A local corporate pays in local currency, while the funds that own these companies are mostly raised, measured and judged in dollars. An exit that clears in Lagos or Cairo can close on time and still return fewer dollars than went in. The exit problem is turning into a capital problem, and the difference matters for who funds African companies next.
The recovery is real, and so is the gap inside it
AVCA recorded 81 exits in 2025, up 27% year on year and the second-highest level on record, with trade buyers the largest single route at 38%. In venture specifically, venture-backed exits rose 31% to a record 34. The largest single exit was a listing: Optasia’s Johannesburg IPO raised about R6.5 billion at a valuation of roughly R23.5 billion, making it Africa’s largest IPO of 2025.
The first is that counting exits isn’t the same as measuring them. Briter’s 2025 data on startup acquisitions shows the problem clearly: of 63 acquisitions announced, only five disclosed a transaction value, and half involved one startup buying another. A startup absorbing a struggling peer for shares counts as an exit in the tally. For the seller’s investors it may return little or no cash. Rising exit counts and weak cash returns can coexist, and on the public record nobody can tell how much of 2025’s recovery was which. AVCA’s full reports may resolve this; its public summaries don’t.
The second is that the money isn’t flowing back into new funds the way a genuine exit cycle would predict. In 2025, fundraising fell 34% to US$2.7 billion across 16 funds, with development finance institutions (DFIs) supplying 64% of commitments and African investors 21%. In a working private-capital market, distributions from exits are what persuade investors to commit to the next fund. When exits hit a near-record and fundraising falls by a third, the returns probably aren’t reaching investors in a form that convinces them. The data doesn’t prove that link, but it is the most plausible explanation for the two numbers moving in opposite directions.
Why a local exit can be a dollar loss
African private-capital funds are built in hard currency. Even the benchmark the industry uses to measure itself reflects this: the Cambridge Associates index of African PE and VC funds, produced with AVCA, draws on funds that report in US dollars, euros or South African rand. The investors behind them, dominated by DFIs, commit dollars and expect dollars back, typically over a fund life of about ten years.
Now look at what happened to Africa’s major currencies over roughly one fund life. According to exchange-rate data covering August 2016 to July 2026, the Egyptian pound lost 82.7% of its dollar value, the naira 77.7%, the cedi 66.9%, the Kenyan shilling 21.7% and the rand 11.2%.
Turn those losses into what they demand of a company, and the map of African private capital redraws itself. By our calculation, a fund that invested in an Egyptian company in 2016 and sold it to a local buyer in 2026 needed that company’s value in pounds to grow about 5.8 times just to return its original dollars, before fees and before any profit. In Nigeria the break-even multiple is about 4.5 times, and in Ghana about 3 times. In Kenya it is about 1.3 times and in South Africa about 1.1 times. The same competent investor, backing an equally well-run company, faces a hurdle four to five times higher in Cairo or Lagos than in Johannesburg, purely because of where the exit gets paid.
This is why the shift to local buyers matters so much. When the likely buyer was a multinational paying in dollars, currency risk sat mostly in the company’s earnings. When the buyer is a Nigerian bank paying in naira, it sits in the exit price itself. The exit route has become domestic; the fund’s investors haven’t.
A model built for a buyer that stopped coming
The dollar-fund model wasn’t a mistake when it was built. DFIs were the only investors with the patience and mandate to commit to African funds at scale, and they committed the currency they had. The exit plan implied by that structure was a sale to a foreign strategic buyer or a listing that international investors would buy, both paying in hard currency.
What has changed is not the funds but the buyers. Foreign strategics still appear, but the growth is local: coverage of 2025’s startup deals notes that African banks, telecoms groups and diversified corporates emerged more prominently as acquirers. Even Optasia, the year’s headline exit, fits the pattern. It was a Dubai-headquartered company listing in Johannesburg, and FirstRand, one of South Africa’s largest financial groups, took a 20.1% strategic stake alongside the offering. The offering was also mainly a payday for existing holders: of the planned raise, about R1.3 billion was new capital for the company and about R5 billion was a sale of existing shares. The biggest African IPO of the year worked because a local strategic anchored it, in a market whose currency had held up.
There is also a valuation problem layered on top. Law firm CMS observes that founders and early investors anchor to unicorn-era benchmarks while trade and secondary buyers want proven cash flow, and deals collapse as negotiations drag on. Local buyers price in local conditions. Sellers remember dollar valuations set in 2021. Many deals that don’t close die in that gap.
Who this redistributes to
Briter’s figures are consistent with the arithmetic above: in 2025 South Africa took 32% of startup funding, Kenya 29%, Egypt 15% and Nigeria 8%, with Nigeria recording its lowest funding share since 2019 despite the highest number of deals. Nigeria still produces companies; it attracts many small cheques and little large money. The currency hurdle isn’t the only reason, but it is the one that explains why the pattern follows exchange rates so closely. Dollar investors are concentrating where the rand and shilling make exits worth something, and rationing everywhere else.
A bank or telco buying in its home currency pays full value in naira, but the dollar-denominated seller receives a much smaller amount. Devaluation has effectively put African companies on sale to domestic buyers, and the H1 2026 data suggests those buyers have noticed.
Dollar investors in high-devaluation vintages lose. They bore the currency risk, and in many cases they’re now selling into it. Their losses shape the next round of fundraising, because the track record new funds are judged on is a dollar track record.
First-time and African fund managers are caught in the middle. They need dollar returns to raise from DFIs, but their deal flow is increasingly in markets where local exits cannot deliver them. H1 2026 offers a hint of adaptation: final closes fell 9% to US$1.3 billion, but the number of funds closing nearly doubled to 13 and average time to close dropped from 2.7 years to 1.8. More, smaller, faster funds could mean managers are resizing to what the exit market can support. That is an inference; the public data doesn’t show who raised them or in what currency.
African institutional investors hold the missing piece, and mostly aren’t using it. A local pension fund that commits in naira and receives naira doesn’t bear the currency risk that makes a Lagos exit a dollar loss. It is the natural investor for exactly the deals that currency is making unattractive to DFIs. African investors supplied 21% of fund commitments in 2025, and AVCA’s chief executive has argued that “the centre of gravity is moving toward local capital, local expertise, and local conviction.” But as Africa Verto has reported, Nigerian pension funds are permitted to hold up to 15% in private equity and use far less. The local-currency buyer for African private capital already exists; the institutions that could fund it on the way in are still largely missing.
The same logic runs through Africa Verto’s analysis of infrastructure finance: an exit requires not just a buyer but a buyer who pays in the currency the seller needs. In infrastructure, no one exits because the liabilities are in dollars. In private equity, exits happen, but in the wrong currency for the people who funded them.
Outlook: three paths, and what to watch
In the first, the market localises. African pension funds and insurers take a much larger share of fund commitments, local-currency funds become normal, and the local exit route becomes a strength rather than a problem. This requires regulatory and trustee behaviour to change faster than it has.
In the second, dollar capital concentrates. DFI-anchored funds narrow to South Africa, Kenya, and companies with dollar revenues anywhere, while Nigeria and Egypt become markets for small cheques, local capital and opportunistic buyers. That is roughly what the 2025 funding shares already look like.
In the third, the subsidy holds the model together. DFIs keep anchoring dollar funds whose returns don’t justify commercial investment, and private capital remains a development-finance product with a commercial label. Given falling aid budgets, this is the least stable path.
Several indicators will show which path is winning:
- African investors’ share of fund commitments. It was 21% in 2025. A sustained move toward a third would be the clearest sign of localisation.
- Local-currency fund closes. Count them and their size, not just total fundraising.
- Exit values, not exit counts. Watch whether AVCA or Briter begin publishing disclosed values and distributions back to investors (DPI).
- The geography of trade sales. If local-corporate acquisitions concentrate in South Africa and Kenya, currency is doing the sorting. If they spread to Nigeria and Egypt at meaningful prices, domestic buyers are absorbing the risk.
- Nigerian pension allocations to private equity. Watch actual take-up, not the regulatory ceiling.
For investors, the question has changed from “who will buy this company?” to “in what currency will they pay, and have we priced that at entry?” For policymakers, the lesson is sharper: the exit route Africa has been asking for now exists, and it is domestic. Whether it becomes a foundation for local capital or just a discount window for local buyers depends on whether African savings are allowed and encouraged to fund the companies at the start, not only to buy them at the end.
African private capital spent a decade worrying that no one would buy what it built. The buyers have arrived. What they reveal is that the industry’s real mismatch was never between entry and exit. It was between the currency the money comes from and the currency the economy runs on.
Report Source
Primary and institutional: AVCA, 2025 African Private Capital Activity Report (key findings); AVCA, Q2 2026 African Private Capital Report; AVCA, 2025 Venture Capital in Africa Report; Cambridge Associates/AVCA, Africa PE & VC Index methodology.
Research: Briter, Africa Investment Report 2025; CMS, The great reset in African private equity.
Secondary: Streamlinefeed and BusinessDay, decade-long currency slide (citing African Markets exchange-rate data); Walkers, Optasia listing; Daba Finance, Optasia IPO structure; Launch Base Africa, Optasia book-build and FirstRand stake; TechCabal, AVCA summit coverage; FurtherAfrica, 2025 startup funding and acquirers.
Break-even multiples are Africa Verto calculations from the cited decade-long depreciation figures (1 รท remaining dollar value).
