Private equity firms seek alternatives as insecurity hits malls
Stanlib chief investment officer Kenneth Kaniu (right) with Ascent Capital managing partner David Owino at the Private Equity in East Africa Conference in Nairobi on June 9, 2015. PHOTO | DIANA NGILA |
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Emerging Capital Partners, a private equity owning the Java chain of coffee shops – two of them located at Westgate mall – told an industry conference the mall attack forced them to re-examine where to set up new outlets.
Insecurity is also affecting the education sector, especially the high-end of the market.
Fanisi Capital managing partner Tony Wainaina said this is forcing some expatriates to relocate and leave their children at home which is affecting enrolment at high-cost schools.
Insecurity is informing where and how private equity firms put up their businesses with attractiveness of malls taking a hit, players in the industry said Tuesday.
Emerging Capital Partners (ECP), a private equity owning the Java chain of coffee shops – two of them located at Westgate mall – told an industry conference the mall attack forced them to re-examine where to set up new outlets.
Paul Maasdorp, a director at ECP, said since the September 21, 2013 attack by the Al-Shabaab terror group, there has been a drop in customers at coffee shops located at malls.
“Our stores in malls have not gone back to where they were before the Westgate attack,” said Mr Maasdorp at the Private Equity in East Africa Conference in Nairobi.
ECP said there is a preference by customers for coffee shops at petrol stations and locations other than shopping malls, to which Java has responded by opening new branches there.
ECP invested in Java in May 2012. Their other local investments are in Wananchi Group and the KCA University.
Insecurity is also affecting the education sector, especially the high-end of the market. Fanisi Capital managing partner Tony Wainaina said this is forcing some expatriates to relocate and leave their children at home which is affecting enrolment at high-cost schools.
Fanisi Capital owns Hillcrest International Schools, a Nairobi-based school offering British curriculum.
The private equity firm, however, says it has responded by looking towards the local market that has a growing and aspirational middle class.
“We have to move to the domestic market,” said Mr Wainaina.
Despite difference in the definition of middle class, most participants said funds are targeting businesses that can successfully service the market such as SMEs in the agribusiness, education and health sectors.
Fanisi has invested in the sectors through Haltons, a pharmacy chain, and Ngare Narok Meat Industries.
A private equity survey jointly carried out by KPMG and the East Africa Venture Capital Association found that between 2007 and 2014, there were 79 disclosed PE deals worth $800 million (Sh77 billion).
Kenya accounted for 63 per cent of the reported deals, followed by Tanzania at 15 per cent, Uganda (10 per cent), Rwanda (eight per cent) and Ethiopia at four per cent.
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