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What quality African businesses are looking for in an investor

Africa News News African September 28, 2026 · Comments off

Most investors have not yet come to a realization that quality African businesses have more funding alternatives than before.

A few years back receiving a term sheet from a potential investor was, in many cases, almost synonymous with having a deal done. Yes, read that again.

The company was often grateful simply to have secured an offer. Once the term sheet arrived, management would focus on getting the transaction completed, with limited negotiation on pricing, covenants, security, governance rights, conditions precedent or other commercial terms.

That dynamic has changed.

Today, a quality African business can have several financing options on the table at the same time.

A well-performing company with a credible management team, audited financials, strong cash flows and a clear growth strategy may be approached by multiple banks, private equity funds, private credit providers, DFIs, family offices and commercial banks- all at once.

And increasingly, local and regional banks are willing to compete aggressively for good borrowers — sometimes offering financing at pricing that can be more attractive. Some offering below market price, just to win the client.

This has fundamentally changed the balance of power in fundraising. The work of an Advisor has also evolved, steering the deal to completion and helping the client choose the most appropriate investor, with the most well-suited term sheet.

A term sheet is no longer the finish line. It is the beginning of the negotiation.

We see management teams asking much better questions:

What is the all-in cost of capital?

What security are you requiring, and why?

What financial covenants will apply?

How much control or influence will the investor have?

What happens if the business misses a covenant temporarily?

Are there restrictions on dividends, acquisitions or additional borrowing?

What are the prepayment and exit provisions?

How flexible is the facility as the business grows?

What happens in a downside scenario?

And perhaps most importantly: beyond providing capital, what value are you actually bringing to the business?

That last question is becoming particularly important.

Capital is increasingly commoditised for high-quality businesses.

The investor who simply provides money may no longer have a sufficient competitive advantage; this is where Local Banks fall short and value adding PE and Debt Funds standout.

Companies are looking for investors who can open markets, introduce strategic partners, strengthen governance, support M&A, facilitate subsequent financing, help families transform their business, support succession planning, provide sector expertise and help management navigate periods of growth and uncertainty.

This does not mean capital has become easy to access. It has not.

There remains a significant financing gap across Africa, particularly for businesses that are too large for traditional SME lending but not yet sufficiently institutionalised for conventional private equity or international capital markets.

But for the right businesses, the funding landscape is becoming considerably more competitive.

For investors, this means the question is no longer simply:

“Can we fund this company?”

The better question is:

“Why should this company choose us?”

For business owners, it means fundraising should no longer be approached as a search for the first investor willing to provide capital.
It should be approached as a process of capital allocation and partner selection.

Evans Wesonga is Managing Director, Noblestride Capital Investments Limited

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