Private Equity - Ethiopia | Statista Market Forecast

The deal value in the Private Equity market is projected to reach US$4.61m in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 12.73% resulting in a projected total amount of US$5.20m by 2025.
The average size per deal in the Private Equity market amounts to US$1.84m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached United States (US$594.00bn in 2024).
In the Private Equity market, the number of deals is expected to amount to 3.42 by 2025.

Definition:

Private equity involves partnerships that buy, manage, and eventually sell companies. These firms manage funds for institutional and accredited investors, who commit significant capital for extended periods. Private equity funds can acquire entire private or public companies or participate in buyouts with other investors, but they typically avoid holding stakes in publicly traded companies. The Private Equity market encompasses a broad range of deal types that involve acquiring equity ownership in private companies. This market typically includes leveraged buyouts (LBOs), growth capital, Carve-outs, and other forms of equity investments that target mature businesses with the potential for operational improvements and value creation. The market presented here does not include Venture Capital investments. While both Private Equity and Venture Capital involve equity stakes in companies, Venture Capital specifically focuses on high-growth potential startups, while private equity firms invest in established companies with the aim of increasing the value of these companies before selling their investment after several years.

Additional information:

The market contains the following KPIs: the deal value, the number of deals, the average deal size as well as the assets under management (AUM). Key players in this market are companies such as Blackstone, The Carlyle Group, KKR, Goldman Sachs, General Atlantic, and Warburg Pincus.

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Leveraged Buyouts (LBOs)
Growth Capital
Carve-Outs
Distressed Buyouts
Secondary Buyouts

Venture Capital
Venture Debt
Traditional bank loans
Digital capital raising

The Private Equity market in Ethiopia is witnessing minimal decline, influenced by factors like economic uncertainties, regulatory challenges, and limited access to investment opportunities. Despite these hurdles, there remains a gradual interest from local and foreign investors seeking growth potential.

Customer preferences: In Ethiopia, there's a notable shift towards sustainable and socially responsible investment opportunities, reflecting a growing consumer preference for businesses that prioritize environmental and social governance (ESG) criteria. This trend is driven by a young, increasingly educated demographic that values ethical consumption and seeks brands aligned with their values. Additionally, urbanization is fostering demand for innovative solutions in sectors like agriculture and renewable energy, attracting private equity interest in ventures that cater to these evolving lifestyle preferences.

Trends in the market: In Ethiopia, the Private Equity market is experiencing an influx of investments targeting sustainable agriculture and renewable energy sectors, aligning with the country's climate goals and economic growth. There’s a surge in interest from local and international investors seeking opportunities that integrate ESG principles, driven by a youthful population that advocates for responsible business practices. This shift is significant as it not only addresses critical environmental challenges but also fosters innovation, supporting the emergence of startups tailored to urban needs. For industry stakeholders, this trend signals the necessity to adapt strategies to capitalize on evolving consumer preferences and attract responsible investments.

Local special circumstances: In Ethiopia, the Private Equity market is shaped by the country's unique geographical features and rich cultural heritage, which influence investment priorities. The diverse climate allows for a variety of agricultural products, attracting investors focused on sustainable farming practices. Moreover, Ethiopia's regulatory framework is evolving, aiming to encourage foreign direct investment while ensuring local community involvement. This cultural emphasis on community aligns with increasing global ESG standards, making the market attractive to investors who prioritize responsible and inclusive growth.

Underlying macroeconomic factors: The Private Equity market in Ethiopia is significantly influenced by macroeconomic factors such as central bank policy, particularly interest rates, which affect capital availability and investment strategies. A stable interest rate environment encourages more investments as lower borrowing costs make financing feasible for private equity firms seeking to capitalize on local opportunities. Conversely, rising interest rates may deter investment, limiting the growth potential of the market. Furthermore, the macroeconomic landscape, characterized by GDP growth and inflation rates, shapes investor confidence and risk appetite, ultimately affecting the overall performance and attractiveness of the private equity sector in Ethiopia.

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

In the last decades, private equity has emerged as a dominant force in global finance, reshaping industries and driving economic growth worldwide. After the peak experienced in 2021, however, private equity activity slowed down in 2022 and 2023, due to multiple factors such as inflationary headwinds, rising interest rates, geopolitical unrest and general uncertainty. With an estimated value of nearly four trillion dollars, private equity dry capital - a term commonly used in the private equity world to refer to committed, but unallocated capital - reached unprecedented heights in 2023. A high level of this capital means that private equity firms have unspent cash reserves. Among the most influential private equity firms worldwide, the Blackstone Group is the largest in terms of funds raised.