Kenya still tops in private equity deals

March 20, 2014
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According to the East Africa Private Equity Confidence Survey by Deloitte, most of the deals focused on agribusiness, healthcare and the financial sector/FILE
According to the East Africa Private Equity Confidence Survey by Deloitte, most of the deals focused on agribusiness, healthcare and the financial sector/FILE
NAIROBI, Kenya, Mar 20 – Kenya remains the top destination for international investors in the Eastern Africa Region after attracting 12 private equity deals last year valued at over Sh9.6billion, up from six deals in 2012.

This is out of 26 deals recorded in the region in 2013 from Uganda, Rwanda, Tanzania, and Ethiopia.

According to the East Africa Private Equity Confidence Survey by Deloitte, most of the deals focused on agribusiness, healthcare and the financial sector.

The key deal in Kenya in 2013 related to Norway’s Norfund and African Infrastructure Investment Fund worth Sh5.2 billion, to build a wind power project worth Sh12.9 billion. The remaining Sh7.7 billion would be funded debt from Standard Bank Group.

Private equity is money invested in firms which have not ‘gone public’ and therefore are not listed on stock exchanges.

Kenya was followed by Rwanda which closed five deals with a reported value of Sh3.6 billion.

These included the Fusion Capital’s Sh2.9 billion investment in a real estate development project in Kigali and a Sh172 million investment in Rusororo, a stone extraction mining company.

“More and more funds are setting up offices in the region attracted by high returns and the large number of opportunities. The survey findings indicate that majority of players are in the investment phase, with most expecting increased competition for deals,” Deloitte’s Director Corporate Finance Services, Alexander Van Schie said.

Tanzania had three deals valued at Sh432 million where two large were completed by Carlyle and Standard Chartered. Meanwhile Kenyan investment firm TransCentury, sold their entire stake in Tanzania Chai Bora Limited a tea manufacturer to Catalyst Principal Partners.

“The deal value however was not disclosed,” Van Schie said.

Ethiopia attracted one deal, by Catalyst Principal Partners, an East African-focused Private Equity firm, which acquired a 50 percent stake in Yes Brands Food & Beverages PLC.

“The region is likely to see more and more investors coming on board going forward compared to South Africa as it has been before. But what will now be key is how to sustain the investors and make sure we continue to see this kind of growth,” Deloitte East Africa tax partner Nikhil Hira noted.

Meanwhile in Sub Saharan Africa a total of 84 deals were completed where 46 of them reported total value of Sh319 billion.

Going forward, deals are expected to concentrate on Small and Medium Enterprises (SMEs) where an expanding middle class is seen as a key driver in the revenues.

The survey was conducted between December 2013 and February this year and targeted General Partners (GP) who primarily invest in East Africa.

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