Bridging the Gap: How Frontier Dominion Supports Smarter Private Equity in Africa

Private Equity 

Private equity (PE) funds are pooled investment vehicles that draw capital from institutional and accredited investors to take ownership stakes in private companies, optimize their operations, and eventually exit via sales or public listings for profit. These funds are distinguished by long-term horizons, active involvement in management, and value creation as the core return strategy. In recent years, Africa has become a growing focus for global private equity due to its youthful demographics, rising urbanization, and increasing growth potential in sectors like agribusiness, healthcare, renewable energy, and financial services firms.

Pain Points in African Markets

Despite the continent's potential, PE investors encounter significant barriers to consistent, risk-adjusted capital deployment. One of the biggest structural barriers facing PE funds in Africa is data opacity. Unlike developed markets where granular, audited, and standardized datasets are accessible, African markets suffer from fragmented, outdated, or non-verifiable company-level and sectoral data. This significantly raises the cost and complexity of conducting due diligence, accurate valuation, and comparative benchmarking. Only 27% of sampled Sub-Saharan African economies can provide businesses with complete access to laws. This allows firms to provide unreliable information, financial reporting and even lose promising ventures due to data gaps. 

Second, regulatory and policy uncertainty complicate long-term investment planning. With the exception of Kenya, Nigeria and Tunisia who have enacted Startup Acts to encourage the inflow of foreign capital, most African countries have dissimilar and unfriendly capital venture statutes, and this requires businesses to jump through hurdles that complicate a long-term exit strategy. Changes in tax codes, foreign exchange restrictions, and capital repatriation laws often implemented without notice erode investor confidence and distort return expectations. 

Transaction costs are also significantly higher in African public equity markets compared to developed markets. Brokerage fees, exchange costs, and other transaction-related expenses raise barriers to entry. Investors also face high due diligence costs in gathering proprietary information. This situation is aggravated by negative international media portrayals, which lead to inflated risk perceptions, higher capital costs, and undervaluation.

Additionally, the dominance of informality in African enterprises poses a dilemma. While they account for approximately 83% and 85% of employment in Africa and Sub-Saharan Africa, informal businesses are vulnerable and often lack basic financial records, legal status, or formal governance. This makes them unsuitable for traditional private equity models that rely on structured growth and clean exits.

Another major challenge is the limited availability of viable exit channels. 71% of LPs cite unclear exit routes and underdeveloped capital markets as key barriers to investing in Africa. While the continent saw 11% annual PE investment growth between 2000 and 2023, exit activity has declined by 26% per year over the past three years, and IPOs now make up only about 10% of exits. Between 2019 and 2024, Africa recorded 80% of its private equity exits from ventures with holding periods of less than 4 years. Public capital markets are shallow across much of Africa, and secondary PE buyers are limited, making it harder to realize exits in the expected timeframes. Compared with developed exit markets overseas, market participants in Africa are faced with sales at lower valuations and consequently profits. 

Frontier Dominion’s Solutions

Frontier Dominion believes in the principle that better research leads to better investment outcomes. Our research services are designed to reduce information asymmetry, sharpen deal screening, and improve post-investment monitoring for private equity investors in Africa. The approach is as follows:

1. Granular Market Intelligence: We deliver highly localized, sector-specific insights using on-the-ground analysts living in African cities and economic zones. This includes progressive data on regulation, demand shifts, competition, and value chains. This data enables our clients to anticipate risks and seize opportunities early.

2. Pre-Investment Due Diligence: Frontier Dominion provides investment teams with integrated reports that combine financial analysis, Environmental, Social, and Governance (ESG) screening, policy risk analysis, and informal stakeholder mapping. This holistic view captures not only financial fundamentals but also the socio-political dynamics that are often pivotal for investment success in frontier markets.

3. Post-Investment Monitoring: As part of our growing research offerings, we aim to provide support to investors through macroeconomic tracking, sector updates, and early signals of portfolio-level risks. While we are not portfolio managers, our goal is to complement fund oversight with timely analysis and context, especially in data-scarce or high-volatility African markets.

4. Provision of Exit Strategy Insights: Frontier Dominion composes market reports with a focus on identifying high-growth sectors and emerging investment hotspots across Africa. These insights can support investors in evaluating long-term potential, spotting future demand trends, and aligning exit strategies with market shifts. By highlighting where capital is flowing and where value is building, our research provides useful context for exit planning, timing considerations, and positioning for secondary market interest.

Strategic Advantage of Working with Frontier Dominion

At Frontier Dominion, we combine rigorous investment-grade analysis with deep regional insights into African markets. Our approach integrates localized knowledge with global best practices, enabling us to bridge the gap between market potential and actionable intelligence. This enables us to identify high-impact opportunities while mitigating risks, thereby enhancing transparency, compliance, and returns for private equity investors.

We believe that private capital can play a catalytic role in Africa’s development, but only if it is deployed with clarity and conviction. By enabling this, Frontier Dominion not only strengthens private equity returns but also contributes to inclusive, sustainable economic growth across the continent.

Conclusion

Africa represents one of the final frontiers for profitable private equity investment, yet there exist daunting risks and uncertainties that come with these opportunities. By partnering with Frontier Dominion, private equity funds gain access to rigorous, on-the-ground research that transforms uncertainty into profitable ventures.