STADIA: Deal Activity 2023

As we head into 2024, I thought it would be good to look back on the year that was: celebrate success and take stock of lessons learnt as we plan for the year ahead. I wanted to share my reflections in the hopes that they can spark synergy with your ambitions and interests for 2024 and beyond.

A Solid Year: 2023 Deal Activity

In 2023, Stadia had a solid year – we closed eleven deals, raising more than USD 70 million across diverse sectors and territories. Our activity was skewed towards Kenya – building on previous success and a reflection of Nairobi as the centre of development capital in Africa – and South Africa. South Africa, again, saw our most sizeable transaction, and we completed three BBBEE deals, including cybersecurity and ICT infrastructure. We also completed an agri-tech deal in India and a UK-based ClimateTech business. The transactions were a mixture of proprietary pipeline deals and those resulting from our partnerships with Microsoft (SA and Kenya ICT infrastructure) and Shell Foundation (pan-Africa cold storage and Indian agri-tech). Our present pipeline also has some Kenyan content but, interestingly, includes companies pursuing regional consolidation in East Africa, based off their Kenyan operations.

Focusing on Key Industries Amidst a Challenging Environment

Industry-wise, in the face of a difficult macro and fundraising environment, we directed our attention to industries and companies that are addressing a major gap in Africa’s infrastructure or products, either on an absolute basis or compared to Europe/US. We see this secular trend as more robust in this macro environment. Industries include ICT infrastructure, sanitation, water infrastructure, software training development, cold storage, and the circular economy. ClimateTech appears to be one of the few areas where there is genuinely more money trying to invest. Several established investors have raised or are in the process of raising Climate-bias funds.

What’s Ahead for 2024?

What will 2024 bring? It’s easy to extrapolate 2023, and the first few months of 2024 are likely to see the tough environment of 2023 dominate. However, forecasting, the conditions might stay hard, but there is unlikely to be a marginal increase in interest rates, inflation, commodity/input volatility, and geopolitical risk. So, the world, including investors and companies, will learn to live with these, even though the consumer will remain under pressure. Elections in South Africa will bring fresh commitment to market normalisation and pledges to capitalise troubled parastatals like Eskom and Transnet, but they will broadly pass without incident. As a result, risk appetite will return, as inactivity and inertia can only serve the investor world for so long. For sure, the trend of companies needing to demonstrate EBITDA positive or a clear path to profitability is going to be prevalent for the foreseeable future.

Looking Ahead: Opportunities and Conversations for 2024

January is a time when people finish off any 2023 overspill while deciding on their 2024 investment priorities (funders) and corporate development (companies). We have an existing pipeline of exciting opportunities and welcome conversations with all market participants to compare notes on the funding environment and, in the case of companies, discuss strategy and outlook to raise capital.

I’d welcome further discussion with you; feel free to contact me at rob.henley@stadiacapital.co.

Snapshot of 2023 Deals

• iiDENTIFii (South Africa), a biometric identification company based in Cape Town with a strong set of corporate clients, iiDENTIFii addresses a major gap in digitising Africa. Stadia raised USD 10 million from Arise, one of Africa’s leading financial investors, and USD 4 million from Sanari, a BBBEE fund. For more details, click here.

• Mawingu (Kenya), Kenya’s largest internet service provider (ISP) dedicated exclusively to the rural and peri-urban markets in the country. Stadia advised on a USD 9 million Series B raise led by InfraCo Africa, with EAV Capital and FMO co-investing. For more details, click here.

• Cavex (UK), a cloud-based marketplace that simplifies climate-positive project evaluation and trading, empowering smaller initiatives to access carbon credit trading and climate financing transparently. Stadia advised on a USD 6 million raise led by E3 Capital with FSDAi. For more details, click here.

• InspiraFarms (Kenya), designs, manufactures, services, and finances energy-efficient, data-driven cold-chain infrastructure in Africa. Stadia advised on EUR 5 million investment from InfraCo Africa. For more details, click here.

• S4S Technologies (India) is an Indian company based in Aurangabad that develops and deploys innovative food security solutions. Stadia, working on behalf of Shell Foundation for S4S, developed their financial model and advised on structuring of the USD 8.9 million debt facility raised from DFC. For more details, click here.

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To learn more about Stadia Capital, visit www.stadiacapital.co or follow us on LinkedIn.

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