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Kenya expects 96pc of funds from troubled EU

By Dominic Omondi | June 29th 2016

Almost all of Kenya’s private equity (PE) funds in the next one year are expected to come from the European market, which lately has been rocked by Brexit.

According to the latest report by audit firm Deloitte Consulting Limited, 96 per cent of PE into the country will be sourced from Europe, a situation that is likely to affect the country’s economic prospects.

The European Union recently found itself in murky waters after citizens of one of its member-states UK voted to leave the 27-member common market. The decision sent some shockwaves into the global financial market as the sterling pound tumbled to one of its lowest levels.

Corporate Affairs Director at Deloitte Gladys Makumi while agreeing that private equity activities from the continent would slow down added that the effects of Brexit would not be that significant. She explained that a lot of the PE investments had already been committed. Moreover, most of these funds were from government-backed Development Finance Institutions (DFIs) which were somehow resistant to recession, she added.

“DFIs are more resilient to shocks simply because they are government based. And most of them had actually put aside money that was being deployed into Africa,” she said noting that it will be difficult for them to retract having already sealed their investments. Some of the DFIs in Kenya include Germany’s DEG, Norwegian Norfund, Dutch’s development Bank FMO, as well American equity firm Emerging Capital Markets (ECP).

Investment analyst at Standard Investment Bank Francis Mwangi agreed that most of the current investments were by DFIs. “DFIs still dominate, chances are DFIs will not pull out,” he said.

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