Kenya has been tipped to remain a hotspot for private equity (PE) with global deal makers expected to be attracted by an improved business environment.
Analysts at Cytonn see the financial services, information and technology sectors as some of the key areas set to interest investors on the back of good returns.
“We remain bullish on PE as an asset class given the abundance of global capital looking for opportunities in Africa, the attractive valuations in private markets compared to public markets and better economic growth in Sub-Saharan Africa compared to global markets,” it said a new outlook on Monday.
“The year saw an increase in PE deals in the region, with the first three quarters registering 140 deals. In 2017, we expect a continuation of this trend, especially in Kenya, which remains an attractive destination for investors.”
Thirty three of the private equity deals in 2016 in East Africa had a disclosed value totalling Sh48 billion and, 14 of them with value of Sh30.6 billion came from Kenya.
The firm notes the improvement in ease of doing business, high return potential across all sectors, a well-diversified economy and consolidation in sectors such as financial services has created an avenue for increased PE activity.
In the financial services sector the analysts expect activity to be driven by consolidation in the banking industry and innovations.
Of key focus in 2017 for the sector will be the consolidation in the banking sector, which has already begun, with three deals recorded in 2016, notes Cytonn.