PE firm to fund second Kenyan Spur restaurant

• The private equity fund, which counts among its backers the African Development Bank, the International Finance Corporation and the European Investment Bank, says it has already signed 25 financing deals for Kenyan enterprises this year, of a target of 40 by end of the year.
• GroFin Kenya general manager Rishi Khubchandani said the PE fund will provide between Sh40 million and Sh45 million for the Spur outlet, which will be located at Eka Hotel on Mombasa Road.
• The Spur Group is listed on the Johannesburg Stock Exchange
• Internationally, the group, which sells franchise rights, has established 38 outlets. The other Kenyan outlet, the Golden Spur Steak House, is located at the Holiday Inn Mayfair Court, Westlands.
• GroFin makes investments of between $50,000 (Sh4.2 million) and $1.5 million (Sh126 million), but the average investment size is $250,000 (Sh21 million) in debt or quasi-equity with an investment period that ranges between four and seven years.

A private equity fund, GroFin, is set to finance the setting up of a second local outlet of South African restaurant chain, Spur, deepening the firm’s investments in the country.

The private equity fund, which counts among its backers the African Development Bank, the International Finance Corporation and the European Investment Bank, says it has already signed 25 financing deals for Kenyan enterprises this year, of a target of 40 by end of the year.

GroFin Kenya general manager Rishi Khubchandani said the PE fund will provide between Sh40 million and Sh45 million for the Spur outlet, which will be located at Eka Hotel on Mombasa Road.

It is expected to be completed by end of next month, according to Mr Khubchandani.

“The managers and staff have gone to South Africa to be trained at the Spur headquarters,” he told the Business Daily.
The Spur Group is listed on the Johannesburg Stock Exchange.

It has 321 outlets in South Africa under the brand names Spur Steak Ranches, Panarottis Pizza Pasta restaurants and John Dory’s Fish & Grill.

Internationally, the group, which sells franchise rights, has established 38 outlets. The other Kenyan outlet, the Golden Spur Steak House, is located at the Holiday Inn Mayfair Court, Westlands.

GroFin makes investments of between $50,000 (Sh4.2 million) and $1.5 million (Sh126 million), but the average investment size is $250,000 (Sh21 million) in debt or quasi-equity with an investment period that ranges between four and seven years.

A flower farm, hotel and a logistics company are other small and medium sized enterprises (SMEs) the fund is investing in this year.
GroFin seeks to influence management of companies in which it invests by offering strategic advice.

It ordinarily exits through self-liquidation where the financed enterprises pay off the debt investment.

The quasi-equity investments are rare and from the firm’s experience many entrepreneurs prefer to maintain their ownership structures rather than have the financiers buy a stake or exit through a listing.

“From experience there is a need for capital but no interest in listing by entrepreneurs,” said GroFin chief executive (Africa) Guido Boysen.
GroFin was founded by Jurie Willemse, a South African, in 2004.

Kenya was its second office opened in 2006. To date it has made $350 million (Sh29 billion) in investments across the continent through seven funds. GroFin Kenya’s general manager said that the spirit of entrepreneurship is strong in Kenya, with most people wanting to be business owners.

The financial discipline and detailed record keeping needed to make it easier to get funding and grow the business is however lacking, according to the PE fund. “A lot of businesses do not keep proper financial records,” said Mr Khubchandani.

In June, Tom Adlam, the managing partner of private equity firm PCP Capital Partners, said that financial reporting by entrepreneurs is not in line with international financial reporting rules. “In some cases what is in the books is different from what is actually there,” said Adlam at the time.