Kenya gets Sh150 billion private equity deals

President Uhuru Kenyatta in the company of other EAC heads of state. [File, Standard]

More than half of the private equity deals signed across the region in the past five years have gone to Kenya.

The investment highlights the country’s standing as a key destination hub for foreign direct investment in the region.

According to the latest report from the African Private Equity and Venture Capital Association (AVCA), deals worth Sh305 billion were signed in East Africa between 2015 and 2020, 58 per cent of which accrued to Kenya.

Last year registered a drop in investments, with the total value of private equity fundraising to Africa falling from Sh425 billion in 2019 to Sh130 billion, largely on the back of the uncertainty around the Covid-19 pandemic.

“2020 saw a decrease in fundraising numbers as a result of the economic effect of the pandemic,” explains AVCA in its report. “PE fundraising dropped to Sh132 billion ($1.2 billion) in final closes, from Sh429 billion ($3.9 billion) in 2019.”

Sparking interest

According to AVCA, the pandemic also presented investment opportunities in other sectors with financial technology (fintech) and healthcare sectors sparking interest among investors across the region.

“Digital innovation and acceleration in the adoption of new technologies catering to people’s demand and need for online services were some of the new opportunities arising in 2020,” explained the report.

“Financials was the most active sector in 2020, attracting 21 per cent of the total deal volume, followed by information technology and consumer discretionary at 13 per cent each.”

Fintech deals accounted for 70 per cent of the total number of deals as investors sought to tap into the exponential growth in cashless payments recorded during the pandemic.

The number of exits however fell from 44 recorded in 2019 to 33 last year. Healthtech, fintech, education technology and agricultural technology were among the top picks for investors seeking to take advantage of market gaps and introduce new ideas arising from the pandemic.