Nairobi-based private equity firm Catalyst Principal Partners is seeking to raise Sh20 billion for regional investment, with International Finance Corporation (IFC) indicating it will chip in with Sh1.5 billion.
This will be Catalyst’s second fund after it raised $125 million (Sh12.5 billion) in 2009. It joins other PE funds like Actis and Fanisi that have raised cash for investment this year.
“The Fund is seeking to raise up to $200 million (Sh20 billion) in third party commitments to make 8-12 mid-market growth capital investments,” the IFC said in disclosure notes.
“Catalyst Fund II is a generalist fund focusing on consumer-driven sectors such as consumer goods manufacturing, financial services and healthcare in Kenya, Tanzania, Ethiopia, Uganda, Zambia, Rwanda and the Democratic Republic of the Congo.”
Catalyst invests in companies for between four and six years before exiting with a target of 20-25 per cent cumulative net returns.
The firm’s investments in Kenya are currently in Jamii Bora Bank, Orbit Chemicals and pharmacy retail chain Goodlife — formerly known as Mimosa Pharmacy.
Across the region, the PE firm has made investments in Tanzania in personal healthcare manufacturer ChemiCotex Industries, logistics and heavy equipment renting company EFFCO and Chai Bora, a tea packer which also has operations in Kenya.
Consultancy Deloitte says the increasing interest in Kenya by private equity firms is driven by a vibrant private sector and a growing middle class, which makes investment in the fast moving consumer goods segment attractive.
Fanisi is currently working to raise Sh4 billion in its second fund while Garden City developer Actis has already raised Sh50 billion for investment in real estate in eight African countries including Kenya.
The fundraising PE firms are likely to tap into the billions of shillings held by pension funds after a law change allowed the retirement schemes to invest up to 10 per cent of their asset in private equity.
The National Social Security Fund (NSSF) has indicated it is looking to put money in PE funds to optimise its returns.