Private Equity firm Fanisi Capital will seek at least Sh4 billion from local investors as part of a Sh10 billion fund meant for regional investments in healthcare, agri-business, retail and education sectors.
This is Fanisi’s second round of capital raising, with the PE having raised Sh5 billion between 2010 and 2015 in the first fund whose proceeds were invested in companies such as Haltons Pharmacy, Kijenge Animal Products in Arusha, ProDev/Minimex Group in Rwanda, Ad Life, Hillcrest Schools and European Foods Africa Ltd.
PE funds have traditionally eyed external financiers for nearly all of their funds, but have increasingly been turning their attention to local institutional investors—especially pension funds— whose investment capacity has grown with the expansion of the economy.
“Several leading pension funds have already committed to putting money into the fund,” said Fanisi Capital managing partner Ayisi Makatiani.
Pension funds are set to become a key source of capital for funds like Fanisi following the introduction of private equity as a stand-alone investment class for the schemes. They can put up to 10 per cent of their assets in the class.
On the external side, the International Finance Corporation (IFC) plans to invest up to Sh750 million in the new fund in exchange for an equity stake not exceeding 20 per cent.
IFC had put in similar amount into the initial fund in 2010 and expects to confirm the latest investment by the beginning of next month.
Fanisi expects to have raised an initial Sh3 billion by the end of this year from both local and external investors, with the balance to be sought over the life of the 10-year fund whose proceeds will be invested across Kenya, Tanzania, Uganda and Rwanda.
Fanisi is currently 75 per cent owned by its founding investment team led by managing partner and CEO Makatiani, with the remaining 25 per cent held by rich Norwegian fund Norfund.
Fanisi typically invests between $50,000 (Sh5 million) and $15 million (Sh1.5 billion) in companies for periods of between three and six years.
According to Cytonn Investments, the increased interest of private equity firms in Kenyan and (sub-Saharan Africa) companies is due to an abundance of global capital looking for investment opportunities combined with the attractive valuations in the local private sector.
This comes amidst improved regional growth projections compared to global markets.