Equity firms make beeline for Kenya

Executive Director of the East Africa Private Equity & Venture Capital Association (EAVCA) Eva Warigia (right) and Sheel Gill, partner and head of strategy and deal advisory at KPMG launch this year's edition of the Private Equity survey.

Kenya leads the region in private equity investment as investors angle for a slice of the country’s growing financial services, energy and natural resources sectors.

Data from the 2017 Private Equity Survey released by consulting firm KPMG and the East Africa Private Equity and Venture Capital Association (EAVCA) indicates Kenyan firms took 61 per cent of deals signed in the region last year alone.

“Kenya has a relatively more developed private equity sector and continues to command a lead in the region,” explained EAVCA Executive Director Eva Warigia during the report’s release on Wednesday in Nairobi. Private equity comprises funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity.

According to the report, a total of 254 private equity deals have been reported in the region since 2010, with a cumulative value of $21.1bilion (Sh2.1 trillion).

Local support

Most of the money went into the financial, fast-moving consumer goods and manufacturing sectors.

“The financial services sector in Kenya has witnessed the most deals at 42, followed by the energy and natural resources at 16 and fast moving consumer goods at 12,” said the report in part.

The report’s release coincided with Fanisi Capital’s announcement that it had successfully closed a deal on a second round of capital, raising Sh3 billion.

Managing Partner and Chief Executive Ayisi Makatiani said close to half of the capital raised was from local investors, an indication of growing local support.

According to the KPMG report, volumes of deals in the country increased from just four in 2010 to about 23 last year, with the number of private equity firms investing in the region doubling over the last three years alone.

This was, however, less than the 26 deals chalked last year. The number is expected to fall further to just nine this year.

“Annual deal volumes have steadily increased in the East Africa region from 23 in 2010 to 47 in 2015,” said the report.

“There was, however, a marked decline in deals completed and disclosed in 2016.”

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