Companies

US equity fund upbeat about Kenya despite Zuku group woes

zukuwoes

Ongoing construction works for the Turkana Wind Power substation project. OPIC is a key financier of the project. PHOTO | SALATON NJAU | NMG

A private equity fund backed by the American government says it is upbeat about its investments in Kenya despite suffering a setback related to shareholder wars at Wananchi Group Holdings, owners of pay TV and Internet company Zuku.

The Overseas Private Investment Corporation (OPIC) says it regards Nairobi as a commercial hub in the region, with its current Kenyan portfolio worth $688 million (Sh68.8 billion) spread across the energy, education, and telecoms sectors.

OPIC either provides financing or political risk insurance cover. The Washington DC-based firm was last month forced to take over the management of ATMT Fund – which controls about 70 per cent of Wananchi - to protect its $50 million (Sh5 billion) financing advanced to the fund which has so far accrued $12 million (Sh1.2 billion) in interest.

“Kenya enjoys many advantages, including a rapidly growing economy, a strategic location in Africa, and a tradition and adherence to the rule of law,” OPIC said in a statement to Business Daily.

“We remain optimistic that Wananchi will continue to grow and thrive, providing high speed internet and pay-tv to an expanding customer base,” said the US development finance institution.

Shareholder row

There were fears that entangling OPIC in the shareholder row would end up spooking global PE firms eyeing or with holdings in Kenya, stifling foreign direct investment flow to Nairobi.

Some of OPIC’s investments in Kenya include low-cost vehicle maker Mobius Motors, 310-megawatt Lake Turkana Wind Power, last-mile internet provider Mawingu Networks, and the 100 MW Kipeto wind farm.

The American fund provided South African lenders Nedbank and Standard Bank with $63.96 million each towards financing of Lake Turkana Wind, billed Africa’s largest wind farm. A further $46 million was provided as political risk cover for the wind project, according to OPIC data.

Mawingu Networks received $4.1 million in financing last year from OPIC to offer cheaper internet to rural households by leveraging on unused TV band spectrum.

Mobius Motors will use the $5 million loan it received in 2016 — with a tenor of nine years including a three-year grace period — to expand production of low-cost off-road vehicles, OPIC filings show.

Other beneficiaries of OPIC funding in Kenya are solar power firm d.light ($5 million) and low-cost chain of schools Bridge International Academies ($10 million).