Private equity exits in Africa reached a 9-year high in 2015, even as firms held onto their investments longer due to economic uncertainty, according to data from EY and the African Private Equity and Venture Capital Association (AVCA).

Private equity firms exited 44 companies in 2015, an increase from 39 in both 2014 and 2013.

This is according to How private equity investors create value, EY and AVCA’s fourth annual analysis of the ways private equity investors create and preserve value in the companies they own and operate in Africa.

The research found that private equity firms have retained their investments longer and waited for the right opportunity to exit as macroeconomic uncertainty has increased.

As a result, the average hold period in the 2015 study was 6.1 years, compared to five years in 2014.

However, private equity firms investing in Africa continue to outperform public markets.

African private equity’s strategic and operational improvement measures have resulted in returns of 0.7x more than the MSCI Emerging Markets Index over the study period (2007 to 2015).

Graham Stokoe, EY’s Africa Private Equity Leader, said: “The last two years have seen an increase in the number of PE firms making exits in the African markets. PE firms clearly are focused on adding value to their portfolio companies and are diversifying their approaches to help achieve this, including helping their portfolio companies expand geographically and bringing in new management.”

“While the economic environment still poses challenges, PE firms continue to find ways to create value in their portfolios in the region and find new opportunities for exits,” he said.

Financial services remained the most common sector for exits in 2014 and 2015 (24%).

Consumer goods and services (16%), industrials (14%) and healthcare (14%) were other active sectors during that two-year period.

Sachin Date, EY Europe, Middle East, India and Africa (EMEIA) Private Equity Leader, said: “Even though PE firms continued to look to trade players (corporates) as the ideal buyers for their portfolio companies, the percentage of exits to PEs and other financial buyers increased in the last two years – 18% of exits in 2014-2015 compared to 13% in 2007-2013.”

“These exits were particularly to larger pan-African and multinational PE firms and financial buyers, indicating both a maturing Africa PE sector and increased competition for sizeable investments,” he said.

The biggest current challenges noted by PE firms included an increasingly tough macro-economic environment, particularly currency fluctuations, valuations trending upwards, and an intermediary landscape that is underdeveloped in a number of countries.

Ponmile Osibo, Research Analyst at AVCA, said: “The research reinforces the critical role that private equity has in facilitating economic and commercial growth across Africa. With exits reaching the highest level in almost a decade, we are seeing routes to exit diversify. However, with a more challenging year ahead, PE firms, together with portfolio companies, will need to take increasingly lateral approaches to developing their growth and exit strategies to ensure that propositions remain compelling to local and international investors.”

Private equity firms surveyed said the financial services, retail and consumer products, and education sectors were the most interesting sectors for future investment, as they are closely related to Africa’s rising middle class.

Other attractive sectors included healthcare and energy.

Dorothy Kelso, Head of Research at AVCA, commented: “Our annual Africa PE exit study continues to show that despite changing macro-economic dynamics, private equity firms are still continuing to outperform public markets, particularly in sectors such as finance, retail and fast-moving consumer goods, where there is burgeoning consumer demand.”