A Brookside milk processing plant. The top milk processor and Nairobi Women’s Hospital are some of the firms in the Abraaj portfolio. File
What you need to know:
The IFC said it expects Abraaj will invest in mid-size companies with potential to expand within the region through various strategies including buying out competitors.
The International Finance Corporation (IFC) plans to invest in a new fund by private equity firm Abraaj Group, part owner of Brookside, targeting companies in Kenya and sub-Saharan Africa.
The World Bank’s private investments arm says it is seeking to invest $50 million (Sh4.38 billion) in Abraaj Africa III which is raising $800 million (Sh70 billion) to invest in SMEs. Brookside and Nairobi Women’s Hospital are some of the companies in the Abraaj portfolio.
The IFC said it expects Abraaj will invest in mid-size companies with potential to expand within the region through various strategies including buying out competitors.
“The fund will seek to partner with companies that have capability to create value through a combination of organic expansion, acquisitions, strategic repositioning and consolidation strategies, thus enabling such companies to become regional champions,” say documents on the proposed investment.
The documents say that Abraaj will use its regional offices to look for potential companies ripe for fresh investment to elevate them into regional powerhouses. “The project team is currently based in Kenya, Nigeria, South Africa and Ghana. The fund will be Pan-African, with investments spanning sub-Saharan Africa,” say the documents.
Abraaj acquired a 12 per cent stake in Nairobi Women’s Hospital worth $2.5 million (Sh229.5 million) in November 2013.
The private equity fund said at the time that its investment would enable the hospital to expand regionally. “This investment will enable The Nairobi Women’s Hospital to complete the financing of its modernisation and expansion plan in East Africa. This will in turn increase the range of treatments and services offered to patients in the region,” said Abraaj.
In 2009 the firm bought a 10 per cent stake in Brookside Dairy, the region’s largest milk processor, for $18.7 million (Sh1.6 billion).
Expanding
Brookside has since been expanding by either buying out competitors or acquiring minority stakes, both locally and internationally. The dairy firm, majority-owned by the Kenyatta family, recently announced plans to acquire a 20 per cent stake in Ethiopia’s Elemtu Dairy and said it was looking into the Nigerian market.
Locally, it has consolidated its market share by buying Buzeki Dairy, maker of Molo Milk and Kilifi Gold, for Sh1.1 billion in a deal announced in November 2013.
Delamere and SpinKnit are the other dairies acquired. Private equity firms have been fund raising with the preferred investments being fast-growing SMEs in the region.
