Markets

Jacana shelves bid to raise Sh6.5bn for SMEs funding

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Mr Simon Merchant, Jacana chief executive officer. Photo/FILE

Summary

  • PE firm puts plan on hold after it fails to raise money within anticipated time.

Private equity firm Jacana Partners has put on hold a plan to raise Sh6.5 billion to finance small enterprises in East and West Africa after it encountered difficulties in the market.

Jacana Partners had launched the $75 million (Sh6.5 billion) SME fund in January 2013, with Kenya amongst markets in Africa where the funds were to be invested.

The PE firm said it had not been able to raise funds within the time it had envisioned.

“Recently, Jacana had been raising a new $75m (Sh6.5 billion) SME fund from development finance institutions. However the fundraising process has been halted as we were unable to reach a sufficient first close within the anticipated timeframe,” Jacana chief executive Simon Merchant told the Business Daily.

But the firm reported that not achieving target as expected would not interfere with operations in Kenya, Uganda, Tanzania, Ghana, Liberia and Sierra Leone, the markets where it operates.

“The existing funds in West and East Africa have not been affected and the businesses we have already invested in will continue to receive value-add investment from our teams on the ground,” Mr Merchant said.

Jacana was launched in early 2013 when InReturn, a Kenya-based private equity fund, merged with a Fidelity Capital Partner, a similar firm operating in West Africa.

The merger was meant to create synergies and make it possible for the PE fund to increase the amount it invests in SMEs.

“The new fund will allow us to significantly increase the scale and geographic reach of our operations and will be invested in SMEs in up to eight countries in East and West Africa.

READ: PE fund lines up Sh3bn deals after merger with Ghana firm

We firmly believe that a unified Jacana operating under the unique Jacana identity is the optimal platform upon which we can fulfil our mission of building the best SME private equity team in Africa, creating sustainable jobs and supporting long-term economic growth,” said Mr Merchant at the launch that was held in Nairobi in January 2013.

Prior to the merger, InReturn was investing between $500,000 and $1.3 million but after the tie-up, the average amount to be invested per SME was to rise to between $1 million and $5 million.

The PE firm has invested in SMEs in real estate, construction and manufacturing.

Jacana’s investments in the construction industry include Subuiga General Merchants, a Thika-based supplier of building materials. The PE firm has also invested in Vipingo Stone, a quarry located in Kilifi County.

In manufacturing it has invested in Reltex Tarpaulins Africa Limited, a Nairobi-based company that manufactures tarpaulins used in relief business.
Horizons Office Ltd, a Nairobi office complex, is its key investment in the real estate sector.

Private equity activity has been picking up in 2014 and fund managers expect that most investments will go beyond companies investing in consumer-oriented goods.

“Going forward, deals are expected to concentrate on SMEs in the consumer-driven sectors where an expanding middle class is seen as a key driver of future revenues,” said the 2014 East Africa Private Equity Confidence Survey by consulting firm Deloitte and Africa Assets.