State of Play in East African Private Equity
13 March 2012
Ration Magazine - March 12, 2012
Capital for Africa
Prospects for East Africa as a PE destination are promising. The continent experienced a significant influx of private equity interest in 2011. According to our data, private equity funds completed 66 deals across sub-Saharan Africa worth USD3.02bn in 2011. Private equity funds signed 20 deals in East Africa, representing a total investment of USD188m. The largest amount of capital deployed in East Africa in 2011 went through two investment rounds to Citadel Capital’s Rift Valley Railways (RVR), which operates the railway concession from Kenya’s Mombasa seaport to Uganda.
The Rift Valley Railway investments put infrastructure at the top of the list of sectors attracting private equity capital, but funds also focused on telecommunications, financial services and health care: all sectors that have shown strong performance across East Africa, driven by the region’s growing consumer class.
New East Africa-focused funds are targeting high-growth small and medium enterprises in consumer-driven sectors. General partners with wider African mandates are also moving into the sub-region. These funds are active across infrastructure, real estate, health care, agribusiness and green energy, in addition to consumer-driven sectors. Venture capital (VC) funding is still scarce, but with the help of incubators, Kenya has begun to stand out as an ICT hub, which will help to attract more interest from local and international VC firms.