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PE deals in East Africa more than doubled to Sh147bn in 2015

Burbidge Capital  chief executive Edward Burbidge (left) with Atlas Development chief executive Carl Esprey at the Nairobi Securities Exchange in December. PHOTO | SALATON NJAU
Burbidge Capital chief executive Edward Burbidge (left) with Atlas Development chief executive Carl Esprey at the Nairobi Securities Exchange in December. PHOTO | SALATON NJAU 

The value of private equity deals in East Africa more than doubled in 2015 mainly driven by activity in the financial services sector, a report by Burbidge Capital shows.
The 2015 annual East African financial review by Burbidge Capital says there were 40 private equity deals in the region with a reported value of $1.44 billion (Sh147 billion), up from 35 reported a year earlier worth $678 million (Sh69 billion).

The value of deals also increased in 2015, a trend that Burbidge Capital expects to continue this year.

“The average PE deal size was $46.5 million (Sh4.7 billion) up from $34.4 million (Sh3.5 billion) in 2014 representing a 35.3 per cent rise. This was in line with our forecast and we believe this growth can be sustained going into 2016,” said Burbidge Capital chief executive Edward Burbidge.

The report ranked London-based private equity firm Helios’s sale of its Equity Bank stake as the largest deal and Burbidge Capital’s deal of the year.

Data compiled by Burbidge Capital shows Helios sold its stake in Equity Bank to a host of investors that included Norfund, NorFinance, NSSF Kenya and NSSF Uganda for a combined $386.5 million (Sh39 billion).

Helios also sold stakes in Kenya’s largest bank by customers to other investors but the amounts were not disclosed meaning that the deal is much larger.

Activity across Kenya, Uganda, Tanzania and Rwanda was concentrated in the financial services sector in 2015 unlike the previous year where transactions ran across agribusiness, mining and financial services.

Investors are expected to continue scouting for opportunities in the region this year since the economies of East Africa are set to register stronger growth than their peers in west and southern Africa which depend on the performance of commodity prices on the international market.

“This year a lot will depend on the macro picture, which is a little confused at present but we expect the region to continue to be extremely attractive for investments — likely considerably more attractive than the resources dependent regions of the continent,” said Mr Burbidge.

PineBridge Investments in its outlook report launched mid this month said deal activity would continue in 2016, adding that the low prices of some stocks had presented an opportunity for investors. Local companies are also buying other firms.

On Monday listed manufacturer and consumer goods company Flame Tree Group announced acquisition of cosmetics company SuzieBeauty brands for an undisclosed amount.

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