For a decade, the pitch for African private equity was straightforward: get in early, ride the growth, and let multiple expansion do the heavy lifting. That pitch is now largely obsolete and nowhere was this clearer than at the 4th Sub-Saharan Africa Private Equity Breakfast, co-hosted by CMS South Africa and Pedersen & Partners in Johannesburg last month. The theme, “Performance Over Promises: Redefining Success in African Private Markets”, could not have been more apt. Seven of the continent’s most active dealmakers – spanning firms such as One Africa Capital, Harith, Mahlako, Norfund, Mamor Capital, Metier and Enko Capital – spent the morning dismantling the old playbook and sketching the one that is replacing it.
The headline shift is in how value is being judged. Panelists were unanimous that valuations built on top-line growth and vanity metrics no longer hold up under scrutiny. What attracts a premium today is sustainable revenue, real customer retention, and platform businesses with operating leverage low enough to acquire the next client cheaply. This reflects a market where currency risk on hard-currency capital deployed locally has become a live constraint, and where founder succession – whether a business can survive and scale beyond the person who started it – is increasingly the difference between a deal that closes and one that doesn’t. Investors are also finding opportunities in the discomfort: turnaround situations, where earnings growth and valuation arbitrage can be captured in the same transaction, came up repeatedly as an underappreciated source of return in this cycle.
Behind these deal-level shifts sits a bigger structural story about who is funding African private markets. Development finance institutions continue to anchor much of the new capital coming into the asset class, but the panel was candid that their role is evolving. DFIs are pushing harder on additionality – proving that their capital is doing something commercial money would not have done on its own – rather than simply substituting for it. That is a healthier long-term dynamic, but it also means fund managers seeking DFI support need to work harder to demonstrate genuine catalytic impact, not just fill a funding gap. Technical assistance and anchor investments, the panel noted, remain central to building institutional-grade managers capable of absorbing that kind of scrutiny and reporting against it.
Where that capital lands is telling. Infrastructure and the energy transition featured heavily in the discussion, and rightly so: transport corridors and intra-African trade infrastructure were flagged as prerequisites for the kind of economic growth the continent needs, not nice-to-haves. But the panel was equally clear-eyed about sequencing. Initial projects need to be sized to manage risk and avoid the development delays that have sunk ambitious infrastructure plans before. Robust contracts, predictable cash flows and clear risk allocation were repeatedly cited as the difference between a bankable project and an aspirational one, while blended finance and credit guarantees were positioned as tools to de-risk projects without crowding out the private capital they are meant to attract. Positioning African infrastructure as an investable, commercial asset class – rather than a development cause – is, in the panel’s view, the single biggest unlock for pulling in global institutional capital at scale.
None of this matters, of course, if value created on paper cannot be realised. This is where the conversation turned most pointed. Distributions to paid-in capital – DPI – has overtaken prospective IRR as the metric international LPs care about, a shift that puts pressure on general partners to show they can return cash, not just model it. Integrated platforms, the panel argued, are proving far more attractive to buyers than fragmented standalone assets, which is pushing portfolio construction earlier into the exit conversation rather than leaving it as an afterthought. Multiple exit channels preserve optionality in what remains a thin and unpredictable secondary market, and speed matters: faster exits protect value in markets where volatility can erode it quickly. Closing the pricing and realisation gap for incoming capital, several panelists agreed, is the single biggest structural fix African secondary markets still need.
What ties these threads together – valuation discipline, DFI recalibration, infrastructure bankability, and the hunt for real exits – is a market that is being forced to professionalise faster than it might have chosen to on its own. Active investor involvement during disruption strengthens alignment with management rather than eroding it. Strategic priorities work better narrowed to two or three, backed by external expertise where a portfolio company’s own team cannot stretch that far. And founders who built a business are not automatically the people best placed to scale it – a point made gently but firmly, and one that will shape a great many succession conversations happening in boardrooms across the continent right now.
This is, in short, a market maturing under pressure. The capital has not left Africa; it has simply become more discerning about where it goes and what it expects in return. For dealmakers, advisers and policymakers alike, the lesson from this year’s breakfast was less about caution than about rigour – building businesses, structures and exits that can withstand scrutiny, because that scrutiny is not going away.
