East Africa continues to experience robust Private Equity (PE) activity and an increasingly strong exit environment according to the latest Spotlight on East Africa Private Equity report
East Africa continues to experience robust Private Equity (PE) activity and an increasingly strong exit environment according to the latest Spotlight on East Africa Private Equity report released by the African Private Equity and Venture Association.
The results indicate that the region’s diversified economies and newly emerging markets are becoming increasingly attractive to investors on the continent at a time when other regions have been exposed to commodity price-driven volatility.
The findings show that East Africa reported a total of 167 PE deals between 2010 and 2016, with a total deal value of $1.4 billion (Shs5 trillion).
Mr Berhane Demissie, the managing partner at Cepheus Growth Capital Partners, said: “East Africa is emerging as one of the most attractive regions for PE investment in Africa.”
Kenya, Uganda and Tanzania demonstrate strong growth figures, with Kenya, the region’s largest market, accounting for 53 per cent of reported PE deals.
Uganda came second at a distant 19 per cent followed by Tanzania at 10 per cent.
Other findings highlight that although PE deal activity in East Africa is more focused on SMEs, a handful of large transactions have significantly affected year-on-year total deal values in the past.
In his opinion about the member states on the findings, Mr Stephen Kaboyo, the managing partner at Alpha Capital, said majority of the companies in East Africa are medium sized that continue to find it very expensive to borrow from commercial banks.
“Because of limited long term capital in EAC markets, PE is filling up that space,” Mr Kaboyo explained.
Commenting on the findings, Mr Alex-Handrah Aimé, the managing director at Emerging Capital Partners, said: “There is reason for continued optimism as both pan-African and international investors are waking up to the opportunities that East Africa presents.”
Deal flow was strongest in Kenya and Uganda, and Ethiopia has notably continued to secure an increasing number of PE deals between 2010 and 2016.
Factors including an emerging middle class and increasing urbanisation have continued to drive industrialisation of the region in financials and real estate, among others.
With an increasingly strong exit environment in East Africa, PE exits increased from a low base of 12 exits in 2010-2012 to 23 exits in 2013-2016.
Source: Monitor

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