Tunisian Private Equity Remains an Underexploited Source of Value
Despite progress and emerging dynamics, the Tunisian private equity sector remains largely underutilized. In this interview, financial analyst Abdelkader Boudriga discusses the reasons behind this missed opportunity for the economy and proposes ways to revitalize the sector and strengthen its contribution to economic development.
Current State of Private Equity in Tunisia
The Press - What is your assessment of the current state of private equity in Tunisia? Despite improvements in 2024, including increased fundraising and transactions, and a relative decline in investments the previous year, private equity remains below expectations and the country's potential. It is an essential lever for the development of small and medium-sized enterprises (SMEs), particularly the smallest ones, which often face difficulties in accessing traditional bank financing.
According to the "Miqyes" barometer on business health, less than 5% of SMEs use private equity, while a dynamic system could effectively support their development and creation. Recent developments can be seen as positive, with an 8% increase in private equity investments between 2023 and 2024, compared to 3.5% for the banking sector. However, in absolute terms, the contribution of private equity to financing the economy remains low, with estimated investments of 5 billion dinars between 2011 and 2024, compared to 110 billion dinars committed by the banking sector in 2025 alone.
Reasons for Poor Performance
What are the reasons for this poor performance? Is it due to the immaturity of Tunisian companies or an unattractive ecosystem for investors? It is a problem of both supply and demand. On the demand side, there is a lack of "good deals." For example, turnaround capital, which accounted for 40% of investments in 2024, is now difficult to find, as companies capable of successful restructuring and attracting funds are scarce.
As private equity in Tunisia is largely driven by tax incentives oriented towards financial restructuring, priority sectors, or disadvantaged regions, the catalog of possible investments often lacks quality opportunities. There is also a cultural aspect, as entrepreneurs at the helm of successful businesses do not want to open up their capital. In general, external growth is only considered as a last resort, when there are no longer sufficient own funds or possibilities for accessing bank credit. This mechanically excludes good companies from the market.
Thirdly, the quality of available data and information is a concern. Whether it is financial statements or other data, their weakness complicates external evaluations, due diligence, and influences an investor's decision. The quality of data produced by companies is very insufficient, and the banking sector also suffers from this.
On the demand side, there is a lack of capacity for analysis, risk assessment, and opportunity evaluation, due to the absence of specialization related to the small size of the market. Analysts are generalists and must navigate from one sector to another.
Supply-Side Issues
On the supply side, the main players are Sicar (investment companies with variable capital), usually subsidiaries of banks, or banks with internal management companies acting on behalf of institutional investors. This structure has contributed to transferring part of the banking risk to private equity. Turnaround capital, which is a good financing mechanism in itself, is sometimes used as a risk transfer mechanism, which somewhat distorts the private equity business.
Furthermore, having a binary system based on conditional incentives, which can lead to the operator's downfall if results are not achieved, compromises the quality of investments and affects the sector's overall performance. The operator is under pressure, facing problematic portfolios, but also a major challenge: exits. Private equity can only develop if it allows for quality exits.
The supply side also presents a paradox. On the one hand, the remuneration of management companies, calculated as a percentage of assets managed, becomes insufficient in value when tickets are small, which complicates selection, monitoring, risk-taking, and support in boards of directors, etc. On the other hand, increasing management fees could harm the attractiveness of the activity and discourage good investors.
Recommendations
What are your recommendations, particularly on the regulatory aspect, to further revitalize the sector? Several avenues have already been proposed, including the implementation of mechanisms to stimulate the impact economy in Tunisia. The 2024 and 2025 finance laws introduced measures in this regard, and their accelerated implementation is now essential. The impact economy represents an underexploited source of value, capable of mobilizing institutional investors, specialized funds, and local entrepreneurial initiatives.
Without evolving the instruments of intervention, currently centered almost exclusively on tax incentives, it will be difficult to attract new capital and structure a market capable of supporting projects with high social and environmental utility. A more diversified approach, combining regulatory levers, adapted financial tools, and risk-sharing mechanisms, appears necessary to trigger a sustainable dynamic.
I also think it is essential to reflect on a regulatory framework, a structuring device, aimed at developing the availability and quality of data. This implies acting on several aspects simultaneously: report quality, incentives, obligations, penalties, access to information, etc. It is a significant undertaking.
It would also be relevant to establish intelligent incentives based on impact. We need to move beyond the current logic, centered on objectives such as restructuring, for example, and engage in objectives related to expected results: jobs saved, environmental impact, etc. In other words, evolve towards incentives linked to outcomes rather than outputs.
Without evolving the instruments of intervention, currently centered almost exclusively on tax incentives, it will be difficult to attract new capital and structure a market capable of supporting projects with high social and environmental utility. A more diversified approach, combining regulatory levers, adapted financial tools, and risk-sharing mechanisms, appears necessary to trigger a sustainable dynamic.
Moreover, the sector must dare to review the mechanisms for setting management fees beyond the market average. A adjustment mechanism could be imagined to guarantee viable fees, allowing private equity to intervene in smaller tickets. In 2025, the average ticket should exceed 5 million dinars, compared to 4.8 million the previous year, while small businesses and startups need tickets around 1 million dinars. These levels of participation are not attractive, which is confirmed by the continuous increase in average tickets.
The creation of a common information platform on operations, designed and managed by the profession, could also be a strong measure. Such a platform would improve the quality of information, strengthen public policies, and create emulation in the market.
It is also time to put in place a system of mandatory certification. Ideally, this would be led by the Tunisian Association of Private Equity Investors. Finally, it is necessary to allow trusted third parties, financial analysis companies, and specialized operators in economic analysis to integrate into the value chain. This would create a gradual specialization in market analysis. The ATIC (Tunisian Association of Private Equity Investors) can make this effort.
