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Pension funds showing interest in equity deals in East Africa - study

In Summary

• Over the two years to December 2018, Kenya reported the highest number of reported deals at 61.

• The region also recorded a 12 per cent increase in the amount of funds sourced from domestic market, largely driven by pension funds.

The report by audit and consultancy firm KPMG and the East Africa Private Equity and Venture Capital Association shows that 84 PE-backed deals were reported at an estimated value of $1.4 billion (Sh14o billion) in 2017 and 2018.
The report by audit and consultancy firm KPMG and the East Africa Private Equity and Venture Capital Association shows that 84 PE-backed deals were reported at an estimated value of $1.4 billion (Sh14o billion)  in 2017 and 2018.

East African has recorded an increase in the number of private equity funds keen on investing in the region to 97 in 2018 from 72 in 2016, according to a new report.

Over the two years to December 2018, Kenya reported the highest number of reported deals at 61, followed by 13 in Uganda, five in Ethiopia, three in Rwanda and two in Tanzania.

The report by audit and consultancy firm KPMG and the East Africa Private Equity and Venture Capital Association shows that 84 PE-backed deals were reported at an estimated value of $1.4 billion (Sh14o billion)  in 2017 and 2018.

 
 

The region also recorded a 12 per cent increase in the amount of funds sourced from domestic market, largely driven by pension funds.

EAVCA executive director, Eva Warigia said the local participation by pension funds has been one way to mitigate against the risk attached to investing in Africa.

Participation of pension funds in private equity investments is improving access to capital for small businesses while enabling the funds to tap into new sectors for their portfolio diversification,” Warigia said.

However, while global PE funds raised has increased over the two years by 25 per cent to $1.6 trillion (Sh160 trillion), there has been a decreased level of fundraising for Africa by 15 per cent to $5.1 billion (Sh510 billion) and East Africa by 18 per cent, close to $0.6 billion (Sh60 billion).

This is attributable to the challenging fundraising environment.

According to KPMG Strategy and Deal Advisory director, Sheel Gill, a total of 190 PE-backed deals in EA have been reported over the period 2007 to 2018 with an estimated value of over $2.7 billion.