West Africa continues to lead in share of private equity (PE) investments by region with a 25% share of deals between 2010 and 2015, a new report from the African Private Equity and Venture Capital Association (AVCA) has revealed.

Michelle Kathryn Essomé, CEO of AVCA, said: “Our annual PE tracker shows that investors remain keen to explore opportunities in Africa through PE funds, providing further evidence of Africa’s untapped potential as an investment destination.”

According to the AVCA’s annual African Private Equity Data Tracker, deal activity in Africa continues to be strong even in an increasingly volatile global economic environment.

The total value of PE funds on the continent rose from $1.9bn in 2014 to $4.3bn in 2015, based on final close.

Fundraising in Africa continues its historical upward trend, with a total of $16.2bn raised since 2010 demonstrating increasing global investor appetite for PE in Africa.

The report shows, that 2015 saw fewer deals above $250m compared with 2014, resulting in a drop in overall total deal value from $8.1bn to $2.5bn.

Nevertheless, deals below $250m in size remained relatively stable, with the total annual deal value of these deals increasing slightly in 2015.

This is in spite of on-going challenges African economies faced including currency devaluation, slowdown in China and collapsing oil and commodity prices.

Sub-sectors that saw a notable increase in PE deal values in 2015 relative to 2014 (albeit from a low base) were commercial & professional services (industrials), healthcare equipment & services (healthcare) and software & services (information technology).

According to AVCA, PE investment in 2016 is likely to continue to be geared towards the FMCG sectors, with infrastructure, real estate and energy also attracting a substantial interest from investors.

Dorothy Kelso, Director of Research at AVCA, said: “As PE in Africa matures, the report shows a resilient industry experiencing continued growth even as wider concerns about emerging markets impact the investment landscape.

“PE firms in Africa continue to inject capital in a variety of sectors from industrials to financial services mobilising local economies and creating jobs. Looking forward, Africa’s fundamentals including rapid urbanisation, a rising middle class population and more business-friendly policies from African governments will continue to provide opportunities of interest to PE investors,” she added.