PE firms to join forces as they eye bigger market share

Private equity (PE) firms Fanisi Capital and Ascent Capital have reached an agreement to consolidate their operations.

The transaction will see the two funds co-invest for improved returns to investors’ funds held under the Fanisi Capital Fund II LLC (Fanisi II) and Ascent Rift Valley Fund II LP (ARVF II).

The Fanisi Fund II is a $35 million (Sh3.5 billion) growth capital private equity fund launched in 2017, while the ARVF II is expected to raise $120 million (Sh12 billion) upon its first close in 2020.

“The Ascent team is highly experienced and respected in the market for East African SME investments. As the Transaction progresses, we expect benefits of scale and more robust investment returns to the Fanisi II investors over time,” said Ayisi Makatiani and Tony Wainaina, the two co-managing partners of Fanisi in a statement yesterday.

Fanisi has been making private equity fund investments in SMEs in East Africa since 2010.

“The ARVF II strategy and philosophy is very well aligned with that of Fanisi II. We are confident that the partnership between the two funds will bring scale and value for all investors, whether of Fanisi II or ARVF II,” said Ascent founding partner David Owino.

The transaction is expected to be finalised in the first quarter of this year subject to relevant approvals. The deal will, however, not affect investments already made by Fanisi Capital Fund.

The investments made under the two firms first funds will continue to be managed separately. Previous investments made by Fanisi include Kitengela International Schools, Hillcrest International Schools, Ngare Narok Meat Industries Ltd, while Ascent has invested in Kisumu Concrete Products and Kampala-based African Queen Distributors.

A recent report showed that investors can make more money by investing in short-term PE funds than through buying company stocks. The study showed that over the last 10 years, PE firms outperformed listed stocks by 76 per cent.