Kenya Got The Lion Share Of East African Private Equity Deals

By  |  June 27, 2019

A look into East Africa’s investment landscape depicts that VC and PE firms have recorded consistent growth. The number of financial and strategic investors entering the region continues to record a rise.

While most of the funds raised have been by international investors, locally raised funds continue to increase. A recent report has divulged that there was 16 percent increase in local/regional funds raised in 2017 and 2018.

The report which is by KMPG, one of the big four accounting firms and East Africa Venture Capital Association (EAVCA) has also revealed that Kenya took the largest share of private equity investments in East Africa in 2017 and 2018.

Out of USD 1.4 Bn PE investments injected in the East Aftcan region, Kenya attracted investments worth USD 1.2 in the two-year period that ended in December .

The report findings correspond with an earlier survey released by AVCA Limited Partner (LP) which ranked Kenya as the second most popular country for PE deals in Africa.

“Kenya remains the most popular investment destination in East Africa with agribusiness, financial services and fast moving consumer goods (FMCG) being the dominant sectors,” reads the report by consultancy KPMG and the East Africa Private Equity and Venture Capital Association (EAVCA).

Highest deal values were recorded in Kenya at USD 1.2 Bn, in part due to the high number of deals as well as the size of businesses,” reads the report.

Of the total 84 deals reported by the PE sector in East Africa, Kenya dominates at 61 (73 percent). “This is higher than the 22 reported deals in the 2015 – 2016 Survey.”

Financial Services sector recorded the lions share of deals in the region with 16 deals recorded in 2017-2018. Agribusiness, TMT and ENR come second and joint third at 14, 11, and 11 deals, respectively.

“Financial Services and Healthcare were the leading sectors in terms of deal values, collectively accounting for USD 1 billion of investment over the 2017 to 2018 period.”

One of the biggest deals Kenya landed on in the survey period were the USD 300 Mn from the British fund Actis for the Kipeto Energy wind farm and USD 100 Mn from Moringa Fund for Asante Capital EPZ, a Kenyan company that develops tropical crop plantations.

Notably, the report also revealed that local pension funds are increasingly becoming an important source of capital for local and foreign private equity firms.

A total of 190 PE backed deals in East Africa have been reported between 2007 to 2018 with an estimated value of over USD 2.7 Bn.

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