EAC Private Equity Update: PPP Deals and Education in Kenya, Acumen Looking at Rwanda
Thursday, 05 January 2012
Kenya Seeks Private Investment for Universities
The Kenyan government is seeking private investment to expand facilities and student housing for the country’s overcrowded public universities. University World News reports that government officials are in talks with several South African investors to construct teaching and housing buildings at the Masinde Muliro University of Science and Technology under a 20-year build-operate-transfer (BOT) scheme. Kenyatta University, the country’s second largest public institution, is also seeking USD11m in private investment for a similar 8-12 year scheme.

Kenya’s first private equity investment in education was made by Fanisi Venture Capital in August 2011 when the fund salvaged Hillcrest Schools from receivership. The deal prompted speculation that leading African economies like Kenya could see more PE investment in education going forward. Admissions for higher education in Kenya have been rising by 40% for the last five years, quickly overwhelming the government’s budget of less than USD300m for the sector.

Lengthy BOT schemes are unlikely to attract many PE investors as they typically work on shorter investment horizons. However, some funds in Africa have shown appetite for public-private partnerships and housing developments, and many funds targeting the region are looking to consumer demand for social services underprovided by governments as fertile ground for future deals.

DVK Group Surveys Kenya for PPP Deals

Local press reports (Capital FM, Business Daily ) that British investment house DVK Group has been scouting around Kenya for public-private partnership deals in agriculture, infrastructure, technology and solar energy. DVK manages several private equity funds and invests in trade and commodity finance for SMEs and corporates along the global value chain across Europe, Africa, South America and Asia.

DVK Group Chairman Deepak Kuntawala visited Kenya in mid-December 2011 along with former British Trade and Industry Minister Nigel Griffiths as part of a delegation arranged by the Commonwealth Secretariat. Kuntawala said the group was especially interested in the Konza Technology City project. It is not clear where the capital would come from for any Kenyan investments, whether from established private equity funds or other investment vehicles.

Acumen Fund Targets Rwanda, Bullish on East Africa

The East African reports that Acumen Fund is considering three opportunities in Rwanda and will make its first investment in the country in 2012. The impact investor makes small-scale investments in Africa and Asia focused on social services such as housing, health and water. Acumen’s recent investments in East Africa include support for microfinance in Kenya and agribusiness in Uganda. Fund executives say they hope to establish a local investment committee to review East African investments and deepen their presence in the promising region. In the last three years, Acumen has reviewed 350 deals, out of which eight were approved.

While Rwanda is often lauded as Africa’s top business environment reformer, the tiny economy has yet to attract sizeable private equity capital, but has drawn some investor attention: Business Partners International recently launched a Rwanda SME Fund, Kaizen Venture Partners have invested in distressed coffee plantations there, Actis is a long-standing owner of the Banque Commerciale du Rwanda, and a growing number of East Africa-focused funds include Rwanda as a secondary investment focus country.

Maybe also interesting:
  • Actis’ Ikeja City Mall Opens in Nigeria as Retail Demand Swells: Actis have invested USD100m in the Ikeja City Mall in Lagos. Michael Chu’di Ejekam, Actis Real Estate Director, commented at the opening of Ikeja: “We believe that Nigeria and Ghana alone have the potential for at least 20 or more similar scale malls.” Note the contrast to Kenya’s comparatively large number of shopping malls – and domestic retail chains!
  • The US American Overseas Private Investment Corporation (OPIC) is now offering political risk insurance for private equity investments in emerging markets.
  • A new South African firm, AngelHub, aims to help young entrepreneurs raise financing. Nairobi’s IHub has held and participated in a number of VC competitions to help young techies find investment. However, many in the IHub crowd may have interesting technical ideas, but often lack business understanding and experience to present an attractive deal to VCs. A local mentoring and angel investor network could fill this gap.

Article republished from our sister publication www.africa-assets.com, an online platform for all news, data and information on private equity and venture capital in sub-Saharan Africa. Find Africa Assets on Facebook and Twitter.

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