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Secondary markets for private shares in African companies

Secondary transactions allow early investors, founders and employees in African private companies to sell shares before an IPO or acquisition. In a market where exits remain constrained, liquidity depends on bilateral negotiations, rights of first refusal and occasional structured vehicles, as illustrated by Sango Capital’s $120 million LP secondary in 2026.

  • Africa Markets
  • 7 min read

In short

  • Secondary sales enable existing shareholders in African private companies to gain liquidity without an IPO or full exit; sellers are often early VCs, founders or rebalancing institutions.
  • ROFR and board consent requirements typically add 30-90 days to any transfer and can redirect the sale to the company or existing investors.
  • Most African secondaries are bilateral and opaque; pricing references last-round valuations or NAV, with limited public data.
  • Sango Capital’s $120 million LP secondary in May 2026, covering 30 companies across 14 markets, is the largest documented African private equity secondary to date.
  • Liquidity remains constrained by thin buyer pools, regulatory hurdles and DFIs’ historical reluctance to sell; secondaries represented a rising but still modest share of exits in 2025.

How secondary sales of private shares function

A secondary transaction occurs when an existing shareholder in a private company sells shares to another investor rather than the company issuing new ones. In African markets this has become an important, if still limited, route for liquidity.

Sellers are typically early-stage venture capital funds seeking to return capital to their limited partners (LPs), founders or employees with vested equity who need cash, or institutions rebalancing portfolios. Buyers are usually later-stage funds, family offices, secondary specialists or, less commonly, strategic investors.

According to reporting on African venture activity, secondary sales helped one pan-African early-stage VC return its entire first $5 million fund after selling part of its position in Nigerian fintech Moniepoint. Such deals were more frequent during the 2020-2022 funding surge but became harder after the slowdown.

Transfer restrictions and the role of ROFR

Private company shares are not freely tradable. Shareholder agreements, articles of association and option plans almost always impose transfer restrictions. The most common is a right of first refusal (ROFR).

When a shareholder secures a third-party offer, they must notify the company. The company — and often existing investors — then has a window, typically 30 days, to match the price and terms. If exercised, the sale redirects to the company or designated investor. Only after waiver or expiry can the original buyer proceed.

Co-sale (tag-along) rights may also apply, allowing other shareholders to join the sale on the same terms and reducing the volume the original seller can transfer. Board consent is frequently required, giving companies effective veto power over new shareholders.

These provisions protect cap table stability and alignment but add friction. A negotiated secondary can take 60-120 days to close, and the ROFR process introduces adverse selection risk for buyers: attractive prices may be matched, while less compelling ones proceed.

In practice, many African deals are negotiated bilaterally with incumbent investors or known parties to avoid triggering lengthy ROFR cascades or regulatory hurdles around foreign ownership.

Pricing mechanisms: bilateral deals versus structured auctions

Most African secondary transactions are bilateral. Price is agreed privately, often referencing the last funding round valuation, revenue multiples or a discounted net asset value (NAV) for fund interests. Disclosure is limited; many deals remain off-market.

Structured platforms or call-auction mechanisms are rarer. Periodic call auctions aggregate buy and sell orders and clear at a single price, reducing information asymmetry and potentially improving price discovery. However, they require sufficient order flow, which most African private companies lack.

In fund-level secondaries, pricing is typically at a discount or premium to NAV depending on the quality of underlying assets, remaining fund life and distributions history. Sango Capital’s May 2026 acquisition of more than $120 million NAV in four African funds from a non-African institutional seller was executed off-market after independent underwriting of approximately 30 underlying companies across 14 markets.

The transaction, financed by Sango’s balance sheet and new commercial LPs including first-time Africa allocators, is the largest documented LP-led secondary in African private equity. It highlights how secondaries recycle capital when traditional exits are delayed.

Liquidity and risks in African private markets

Liquidity in African private shares remains thin. Global secondary volumes reached records of $162 billion in 2024 and approximately $240 billion in 2025, yet Africa accounts for a marginal share. The Global Private Capital Association noted limited buyer pools, few local specialists, and the historical reluctance of development finance institutions — major capital providers — to sell secondaries.

Only a handful of dedicated players, such as Sango Capital, actively operate in the space. This concentration means deals are lumpy and often require deep local relationships and currency-risk management.

Key risks for participants include:

  • Regulatory and foreign ownership rules: Transfers may need central bank or sector regulator approval, particularly in Nigeria, Kenya or South Africa.
  • Currency and country risk: Many companies generate revenue in local currencies while valuations are discussed in dollars.
  • Information asymmetry: Limited financial transparency and few comparable transactions complicate valuation.
  • Locked-up capital: Even after a secondary, new buyers may face further restrictions or long holding periods.
  • Adverse selection: High-quality assets may be retained by incumbents exercising ROFR.

For founders and employees, secondary sales can provide meaningful liquidity but risk misalignment if large investors exit early. For buyers, the absence of deep trading venues means positions are illiquid until a further exit.

Recent activity shows maturation. In 2025, secondaries formed a rising share of exits alongside trade sales. GP-led continuation vehicles and sponsor-to-sponsor deals are increasingly used. South Africa’s more institutionalised private equity market is seeing growing interest in fund secondaries as older vintages approach end-of-life.

What to watch next

Activity is likely to concentrate around established names with strong revenue traction and clearer paths to future liquidity, such as companies that have completed later-stage rounds or are preparing for public markets. Fund-level secondaries will probably remain the more scalable format in the near term, allowing buyers to acquire diversified exposure without single-name concentration risk.

Continued growth in local institutional capital and greater willingness by DFIs to use secondaries as a tool to crowd in commercial money could expand the buyer universe. However, without sustained increases in underlying company performance and exit pathways, liquidity will stay episodic rather than structural.

Exploring secondary transactions on Africa Markets

Africa Markets maintains researched profiles of African private-company funding rounds, including later-stage deals where secondary opportunities sometimes emerge. Readers can review deal intelligence on companies such as Flutterwave, Moove and earlier transactions like Sabi or Moniepoint.

The platform’s trading demonstration illustrates how periodic call auctions could price private shares using sandbox orders and a single clearing price. Members in early access can also examine Sango Capital’s $120M secondary and related liquidity commentary in the insights section. Sign-up for early access is available at early access.

Sources

Researched with AI from public sources and edited by the Africa Markets team before publication. It is information, not advice. See our Disclosures.

Deals mentioned

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