Private Equity

Private Equity (PE) has grown exponentially in recent years driven interest of investors from developed countries in Africa's frontier and emerging markets. Kenya has been a good destinations for PE deals with good resources and quality deals. 

PE continues to grow in the East Africa region and there is a keen interest in emerging countries such as Ethiopia with its large market.

Most of the PE deals are in the financial services, manufaturing, Fast Moving Consumer Goods, healthcare and retail.

Source of funds

The main source of PE fund in East Africa is Europe through development finance institutions (DFI), pension fund and endowment. It is anticipated that local pension funds will start exploring PE funds. 

Debt financing is not preferred due high interest rate, foreign exchange fluctuations and fiscal deficits.

 

Exit Route

The main exit route across Africa is sales to a strategic investor and sales to a secondary PE fund. In some cases, small PE funds exits via sales to larger PE funds, IPO is less attractive as it is too cumbersome and difficult to do.