London-based private equity firm Actis has bought a minority stake in AutoXpress, a regional company which sells and services car tyres, wheels, batteries and suspension parts.
Actis on Monday said it had acquired a 36 per cent stake in AutoXpress for an undisclosed amount, highlighting the increased interest in Kenya’s motor industry.
The equity injection into the family-owned business was informed by the growing need for tyres, repairs and batteries as Kenya’s growing middle class with disposable income buy vehicles.
“AutoXpress’ products and services are particularly relevant to the Kenyan market, which is dominated by second hand cars,” said Michael Turner, Actis head of East Africa.
Actis is associated with big ticket deals in energy and real estate development, and the investment in the tyre distributor marks its entry into the auto business in Kenya.
Its current portfolio investment includes development of the Sh4.2 billion ($250 million) Garden City, a mixed use property development with residential, retail and office space.
Actis is also developing the second phase of the Nairobi Business Park consisting of commercial office space. The PE fund is a majority shareholder of Tsavo Power, a 74-megawatt diesel-fired plant in Mombasa.
AutoXpress has 19 outlets in Kenya and one in Kigali, Rwanda where it sells tyre brands such as Pirelli, Dunlop, Marshal, BKT and Chloride Exide batteries.
The proceeds from the sale of the shares will also fund AutoXpress regional expansion to Tanzania and other East African markets.
“Actis’s proven track record, industry experience and regional insights make them the right investor to support AutoXpress in its next stage of growth in East Africa, with additional stores planned for Kenya and our imminent entry into the Tanzanian market,” said Sandeep Shah, managing director of AutoXpress.
The company was founded by Gosar Raishi Shah in 1958 trading as Nyanza Petroleum Dealers and was in the tyre retail business. It rebranded in 2008 to AutoXpress and ventured into Rwanda the same year. It currently employs about 300 staff.
AutoXpress lists on its website top corporate customers to include General Motors, Toyota, CMC, Simba Colt, Brookside, Kenya Power, Safaricom and Kenya Wildlife Service.
The financial muscle brought in by Actis will help AutoXpress take on competitors such as Sameer Africa and Kingsway Tyres who are in tyre manufacturing and sales respectively.
Kingsway Tyres has 15 branches in Kenya and deals in rival tyre brands such as Michelin, BFGoodrich and Kumho as well as Delkor car batteries.
Sameer Africa, maker of Yana tyres, is currently seeking a strategic investor after the exit of Bridgestone Corporation which owns a 15 per cent stake in the listed firm.