East Africa private equity outlook

Private equity firms in East Africa are experiencing a surge in investments, with a whopping $1.1 billion raised between 2015 and 2016, marking a 41 per cent increase compared to the previous seven years. The partnership between consultancy KPMG and the East Africa Venture Capital Association conducted a sector survey that highlighted the growing trend in private equity investments in the region. The report sheds light on the evolving landscape of private equity, showcasing a positive outlook for East Africa. Marshel Nyagor, Research Analyst with Zimele Asset Managers, discussed the flourishing private equity landscape, emphasizing the growing interest from investors and the government's efforts to boost the business environment. Nyagor's insights provide valuable information on the investment opportunities and the factors driving the surge in private equity funding in East Africa, with a focus on Kenya. The survey indicates a shift in investment focus from other regions to East Africa, driven by the downturn in commodity markets in South and West Africa. This redirection of investments underscores the potential and attractiveness of the East African market for private equity investors. Despite the positive trend, the private equity investments in East Africa represent less than 1% of the total private equity flow in Africa, indicating substantial room for growth and opportunity in the region. Nyagor highlighted the potentials in sectors such as agriculture, manufacturing, and consumer goods, fueled by the growing middle-class population and burgeoning consumer market. The significant growth in real estate and consumer markets post-2010 election in Kenya has also contributed to the increased private equity investments in the region. Fanisi Capital's successful capital raising of $3 billion is a testament to the growing confidence and interest in homegrown equity funds in East Africa. The firm exceeded its target within a short period, attracting commitments from major pension funds, such as Kenya Power, showcasing the trust and confidence in local funds. Investors are keen on clean and promising businesses, making companies like Fanisi Capital an attractive investment option. The shift in perception among pension funds to explore alternative investment vehicles like private equity signifies a transition towards diversified investment portfolios in East Africa. The evolving investment landscape in Kenya offers valuable lessons for neighboring countries like Rwanda and Uganda. By identifying and supporting promising businesses, investors in these regions can tap into the growing pool of private equity funding and capitalize on the readiness of investors to support viable ventures. As the private equity sector continues to gain momentum in East Africa, it paves the way for a thriving investment ecosystem, driving economic growth, and creating opportunities for businesses to scale and expand. The increasing interest from investors and the success stories of local funds like Fanisi Capital set a positive trajectory for the private equity landscape in the region, unlocking new avenues for growth and development.