Kenya records highest private equity fund deals in East Africa

Nairobi - Kenya signed the highest number of private equity deals last year in sub-Saharan Africa ahead of its main rivals South Africa and Nigeria. 
A wind project in northern Kenya. The country’s biggest equity deal was to finance wind power project. Net photo.
A wind project in northern Kenya. The country’s biggest equity deal was to finance wind power project. Net photo.

Nairobi - Kenya signed the highest number of private equity deals last year in sub-Saharan Africa ahead of its main rivals South Africa and Nigeria. 

The major deal in Kenya related to Norfund and Africa Infrastructure Investment Manager’s $60m equity investment in a wind power project. The project is worth $150m but the remainder will be financed through a debt from South African Standard Bank Group.

In all, Kenya recorded 12 private equity deals, with South Africa netting 10 and Nigeria nine, a private equity report released on Thursday by Deloitte and Africa Assets indicates. The country shrugged off the March 4, 2013 elections jitters to catch private equity attention.

“We see investors quite optimistic on economic climate, especially in Kenya and Ethiopia, fuelled by infrastructure developments and stable political environments,” said Deloitte East Africa’s director of corporate finance services Alexander van Schie at therelease of the report titled ‘2014 East Africa Private Equity Confidence Survey: Clarity and Distinction’.

The number of deals in the sub-Saharan Africa region last year grew to 84, a 44.8 per cent increase from 58 deals disclosed in 2012. Most of the deals were struck in East Africa, 26, followed by West Africa with 24. Southern Africa and Central Africa recorded 19 and seven deals, respectively. Five deals were cross-regional and another three were continental. Deal-hunters faced stiffer competition for lucrative transactions last witnessed in 2011.

“Private equity funds invested more than three times as much in sub-Saharan Africa in 2013 as they did in 2012,” states the report.

East Africa was the most attractive for private equity funds with four out of the top eight countries with most deals in sub-Saharan Africa. 

Kenya, Rwanda, Uganda and Tanzania had 23 deals collectively out of the total 51 deals for top eight countries in the region.

“Deals doubled in East Africa to 26 from 13 in the previous year, and Kenya had a huge chunk of these,” said Andrea Bohnstedt, a director of Africa Assets. 

Despite the huge number of deals in East Africa however, smaller deal sizes resulted in lesser value. Only 46 deals out of the 84 recorded disclosed their worth, amounting to $3.69b. East Africa’s $163m worth of deals trailed West Africa’s $545m and Southern Africa’s $491m. The value of continental deals was the highest at $1.85b, followed by cross-regional deals worth $678m.

The biggest deals were recorded in infrastructure and extractive industries, but consumer-focused deals and agribusiness remain popular. Funds are looking at banking, fast-moving consumer goods, healthcare and education as some of the routes to reach down-market.

 

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