25 - 27 Jul 2023

The Kenyatta International Convention Centre

Kenya leads East Africa region in Private Equity deals

Kenya attracted private equity (PE) investments of USD 1.2 billion (Sh120 billion) in the two years ended December, taking the lion’s share of capital committed to East Africa.

This marked a sharp increase from the Sh480 million the institutions invested in the country in the preceding period (2015 and 2016).

A new report tracking PE investments shows that Kenya accounted for 87 percent of the total USD 1.4 billion (Sh140 billion) investments made in the region in 2017 and 2018.

“Highest deal values were recorded in Kenya at USD 1.2 billion, in part due to the high number of deals as well as the size of businesses,” reads the report by consultancy KPMG and the East Africa Private Equity and Venture Capital Association (EAVCA).

“Kenya remains the most popular investment destination in East Africa with agribusiness, financial services and fast moving consumer goods (FMCG) being the dominant sectors.”

Deal volumes in Kenya in the review period stood at 61, accounting for 73 percent of total transactions.

Uganda was second, followed by Ethiopia, according to the report.

The top deals in Kenya over the past two years include Actis’ USD 300 million (Sh30bn) equity investment in Kipeto Energy in which it took an 88 percent stake.

Moringa Fund also made a USD 100 million (Sh10 billion) equity investment in Asante Capital EPZ, a Kenyan company developing tree plantations and tropical crops (mainly ginger, moringa and eucalyptus).

Digital lender Branch International attracted a total investment of USD 70 million (Sh7 billion) from a consortium of institutional investors, including Victoria Park Capital, IFC Ventures and Andreessen Horowitz.

Abraaj Group, which is currently facing liquidation after defaulting on loans, spent USD 171 million (Sh17 billion) to acquire Avenue Hospitals.

AfricInvest made its initial Sh5.7 billion investment in insurance group Britam Holdings in which it has subsequently built up its stake to 17.5 percent after buying more shares on the Nairobi Securities Exchange (NSE).

“Investment into Kenya is diversified through 10 sectors attracting PE funding,” the report says, identifying the top industries as financial services, FMCG, telecommunications, manufacturing, agribusiness and transport among others.

Local pension funds are becoming a significant source of capital for PE firms which are seeking to raise their exposure to alternative investments beyond the traditional bonds, listed stocks and property.