Fusion Capital, a private equity and fund management firm, has invested at least Sh87 million in Remu deposit-taking microfinance, aiding the lender’s expansion drive.
Fusion did not give the exact amount involved, but said its latest deal was within its criteria of investing in deals sized between $1 million (Sh87 million) and $5 million (Sh433 million) in both debt and equity.
The deal will see Fusion diversify into the financial services sector as it gets a 25 per cent stake in Remu while the microlender said the capital injection will give it funds for strategic expansion.
“This is part of our strategy to strengthen our foothold in the financial services sector in the region, having invested in a diverse range of businesses including manufacturing, agro-processing, mining, hospitality among others,” said Fusion chief executive Luke Kinoti.
Fusion also said its investment in Remu will be the last deal that involves both lending and buying a stake in a firm.
The private equity firm said that it will now focus on only buying stakes in small and mid-sized enterprises and making investments in the real estate sector.
Recently it invested Sh245 million in GAL Baking Services through both debt and equity. Remu said that the investment will give it funds to open more branches, introduce mortgages and electronic banking.
The micro-lender has three branches in Nairobi, Meru and Maua, but plans to grow the network to 30.
“This partnership is strategic to Remu, we will benefit from Fusion’s expertise and support to grow our business,” said Remu general manager Lydia Kibaara in a statement.
The Central Bank of Kenya licensed Remu as a deposit-taking microfinance in 2011.
Remu joins Platinum Credit, Sumac DTM and as other microlenders that have attracted investments by private equity firms and other financiers.
Centum bought a 45 per cent shareholding in Platcorp Holdings, the holding company of micro-credit organisation Platinum Credit in January 2013 and Sumac is in talks with strategic investors to raise Sh500 million through both debt and equity in September.